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Canada’s big four housing markets favour buyers; tariffs slowing sales

Canada’s major housing markets have returned to the more balanced conditions experienced four years ago, before COVID-19 and the Bank of Canada slashing its overnight rate to .25%, says a new report from RBC Economics. 

The report says home sales, recorded by local real estate boards, were down in February from January, predicated by concerns about economic impacts of then-pending US tariffs. 

‘The Toronto market took the biggest hit with transactions plunging to a new cycle low,” says the report. “Activity fell notably in Vancouver, Fraser Valley, Calgary and Montreal.” 

“Edmonton continues to be one of the stronger markets in the country with prices still rising at a brisk pace, even though it’s not immune to the generalized slowdown in activity.” 

The upside is buyers have the widest selection of available homes in years thanks to a surge of properties listed for sale in January, especially in Vancouver, Fraser Valley and Toronto where bargaining power has clearly shifted in their favour. 

Prices are on downward trends in those markets, says RBC. 

“The MLS Home Prices Index is down below year ago levels in all three markets. Toronto’s index fell the most in 15 months in February on a sequential basis.” 

However, buyers could stay on the sidelines, given the escalating trade war launched by the US against Canada, Mexico and China. 

“It threatens to further erode market confidence, upend buyers’ plans and quiet a usually busy spring season. The impact would intensify the longer trade uncertainties,” says RBC. 
 

Here’s RBC’s take on the four largest Canadian markets. 

Calgary 

The city is in cooling mode after a year of record-breaking sales, but has been singled out as the city second most likely to feel the repercussions of tariffs.  

“Resale activity dipped roughly 12% from January (seasonally adjusted), while still running at a historically robust level. This represented the steepest decline in 16 months,” says RBC. “With inventory rebuilding over the past year, thanks in part to strong housing construction, the market is now more balanced after being among the tightest in the country over the better part of the last four years.” 

The rate of price increase has almost stalled, with Calgary’s home price index rising only 0.9%, compared to 11% in spring 2024. 

“We expect further cooling while the trade war with the U.S. heightens economic worries,” says RBC. 

Vancouver and area 

It’s a market that was getting back on its feet, but had a significant setback in February. 

“We estimate homes resales fell more than 15% in February from January seasonally adjusted,” says RBC. “This essentially reverses the progress made in activity the past six months.” 

With buyers and sellers on the downlow, the inventory in the area has rebounded, with the market well-supplied relative to the soft demand. 

“Mild downward price pressure has also been rekindled. The Vancouver-area MLS HPI slipped 1.1% from a year ago in February after rising slightly higher in the previous two months,” says RBC. “Most of the softening has occurred in the condo segment where the index is down 2.8% as detached home values continue to slowly appreciate, up 1.8%.” 

“Trade turbulence clearly adds downside risks to activity and property values for a market that was already challenged by extremely strained affordability.” 

The Greater Toronto Area (GTA) 

Canada’s largest market was benefiting from lower interest rates, until the threat of a trade war and a series of major snow storms contributed to a 29% drop in home resales between January and February, the largest one-month drop since the early days of the pandemic. 

“The level is the lowest this cycle. The turn of events raises serious questions about the market’s ability to continue on its bumpy recovery path in the near term,” says RBC. “Earlier rises in property listings have markedly boosted supply, putting buyers in a strong position to extract price concessions from sellers.” 

GTA prices are looking up to where they used to be. 

“Toronto’s composite MLS HPI fell a hefty 1.5% from January to February,” says RBC. “The index is down 1.8% from a year ago with condo prices accounting for much of the decline. The condo segment has contended with a wave of new completions in the past year, while many investors moved to the sidelines.” 

“Downward price pressure could intensify if the trade war causes job losses and other material economic damage.” 

 Montreal 

As in the GTA, trade war anxiety and significant snow storms contributed to the largest drop in home resales in four years, down 11% in February from January. 

“This put a sudden halt to a long, sustained rebound since 2023 that had returned activity to pre-pandemic levels at the start of this year,” says RBC. “Supply-demand conditions are now easing, but they remain relatively tight. Earlier brisk demand and levelling inventories increased competition between buyers and turned up the heat on prices.” 

Prices for single-family homes and condo apartments in Montreal are up from year-ago levels, 8.9% and 6.3%, respectively. 

“We expect some of this heat will dissipate in the period ahead and the pace of appreciation will moderate. Any sizable economic shock ensuing from the trade war could accelerate this cooling.” 



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