Market Insight for August 28

For Canadian Realtors hoping the housing market was finally turning a corner, the July stats had brought some encouraging news.

After a long stretch of uncertainty, buyers and sellers were beginning to adjust to the new market. Activity was picking up, confidence was slowly returning and there were signs that the housing market was finding a more stable footing. But could the trade war be yet another hurdle for the market to overcome?

The latest round of tariffs has introduced another dose of economic uncertainty just as the housing market was showing some encouraging signs. That doesn’t necessarily mean the recovery is over, but it does give buyers, sellers and Realtors another factor to consider heading into the fall.

The connection between the economy and real estate is pretty simple. People are more comfortable making a major purchase when they feel confident about their jobs, their income and the direction of the economy.

A prolonged trade dispute can push up the cost of goods and put additional pressure on businesses. Companies facing higher costs may delay hiring while consumers may become more cautious with their spending. Even if the housing market itself isn’t directly affected by tariffs, the economic uncertainty surrounding them can still influence people’s decisions about buying or selling a home.

That could be particularly important in markets that have already been struggling with affordability and higher borrowing costs.

The housing market today is not the same market we were dealing with during the worst of the downturn. Buyers have had more time to adjust to higher borrowing costs, while sellers have had to become more realistic about pricing and there is evidence that demand is beginning to come back.

The July sales numbers were encouraging but the trade war adds another layer of uncertainty at a time when many Canadians are already carefully watching their finances. For Realtors, that means the fall market could be a little harder to read.

There may still be buyers who have been waiting on the sidelines and are ready to make a move. There are also homeowners who need to sell regardless of what the economy is doing. But there could be another group that decides to wait and see what happens with the economy before making a major financial commitment.

It is also worth remembering that real estate markets are local. A trade war won’t affect every province, city or neighbourhood in exactly the same way. Some areas may feel the economic impact more quickly than others, while markets with strong employment and limited housing supply could prove more resilient.

For now, the big question is whether the improving housing activity seen through July can continue despite the new economic uncertainty. And after everything the Canadian housing market has been through, nobody should be surprised if the road to recovery turns out to have a few more bumps along the way.

A steady, gradual improvement would be just fine. And perhaps that’s exactly what we’re beginning to see.