The scary thing

It only took the threat of Tariff Man to rattle the housing market. Now it gets real.

The country’s largest real estate boatrd says sales last month cratered 28% while listings lit up. The result was a massive imbalance of supply over demand. Active listings have jumped 76% year/year. Buyers have just under 20,000 available resale properties to choose from (and another 21,000 unsold new-builds). That’s pushed months of inventory to almost five. Compare that to the 2022 boom, when there was a scant two-week supply.

The conclusion: it’s a buyer’s market.

Sellers are concerned. Realtors are lonely. Prices are down year/year and every day the stack of unsold properties grows higher. Things were tough already – high mortgage rates, too damn much snow, rising unemployment – then we got Trump in our face. Now people are talking about a real estate disaster.

“The unknown can be a scary thing especially for agents who had a slow 2024,” says veteran realtor Carly Weiss. “The comments I’m receiving from buyers’ agents on my listings are ‘well we don’t know what will happen with prices with the tariffs and job insecurity.’”

Crusty broker, blogger and rockstar mortgage dude Ron Butler says if you need a mortgage and work in an auto plant, fuhgeddaboudit. “We can reasonably expect a severe focus by mortgage lenders on which employees have exposure to job loss in the Trade War,” he says. “Mortgage brokers & bank mortgage sales forces will be writing up description of jobs that clearly define an Industry’s exposure to Tariff based layoffs.

“For those working at an Auto Parts plant a new mortgage is about to become MUCH harder Real Estate Sales could slow dramatically in some provinces particularly Ontario & Quebec as many people will feel their futures are way too uncertain to buy a house.”

And check out the homebuilders. They’re apoplectic. “Trump tariffs could decimate Ontario’s housing sector,” screams the latest media release by that province’s construction industry.

“The risk of a resulting economic downturn is significant. And as a result, we will undoubtedly see less housing starts, ongoing projects halting, and completed projects struggling to close,” it says. Construction has already fizzled. Unsold units litter the landscape. New projects are being shelved. And now – thanks to Trump – there is no way ambitious home-building targets can be met, provincially or nationally. In fact in certain cities (like Guelph) starts have crashed by at least 60%.

Click to enlarge. Source: OHBA.

As for the Toronto real estate cartel, the message is simple. Clear. Orange guy bad. “On top of lingering affordability concerns, homebuyers have arguably become less confident in the economy,” says analyst Jason Mercer. “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.”

“Where available financial capital cannot get a reasonable return, it usually flees the jurisdiction. This will not be good for Ontario or Canada. Housing starts were already significantly down; this means more projects go unsold, get converted to rentals, or stop construction and go into receivership. We may be looking at a prolonged slump for the housing sector as a result of these tariffs.”

Nationally, CREA says the surge in listings is the most consequential in more than forty years. In Vancouver, sales last month fell 11% and active listings are ahead of last year by 32%. In Calgary, there were 19% fewer deals last month and yet inventory soared 76% above year-ago levels.

So what next? If Trump does to the housing market what he appears willing to do to cars, manufacturing, lumber and Wayne Gretzky, how will Canadian policymakers respond?

Well, get set for lower interest rates. At this point it’s about all our guys can do to mitigate the pain (unless Trump changes his mind again today… incredibly). “Without tariffs, we expected the BoC to gradually cut rates to 2.25%,” say the economists at RBC (the bank’s policy rate is currently 3%). “Now, we expect that the longer tariffs remain in play, the greater the likelihood that rates fall faster and by a larger magnitude.”

Many people figure the CB will shag a full half-point from its benchmark next Wednesday morning if the tariff situation remains as it is today. Lenders are actually dropping the cost of many five-year loans in anticipation, and hopes of maintaining loan volumes – now tanking along with commission cheques.

As this pathetic blog entry is being written, the rogue American president and our almost-expired PM are set to talk. Speculation grows that after one single day the White House may be realizing how dumb this whole thing was. Or not. Maybe reduced tariffs will be offered. The Canadians say take them all off, or we’ll neve drink bourbon again.

Meanwhile condos go unloved, bungalows unbuilt and unsold inventory swells. The spring market is already pooched. As is our trust.

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Source: https://www.greaterfool.ca/2025/03/05/the-scary-thing/