The Spring Housing Market in Canada: A Tale of Uncertainty and Opportunity

The Spring Housing Market: A Season of Slowdown

Spring is traditionally a bustling time for Canada’s housing market, but this year, the sector is grappling with unprecedented challenges. The threat of tariffs imposed by U.S. President Donald Trump has cast a shadow over the market, leading to a significant decline in home sales and prices. According to data from the Canadian Real Estate Association (CREA), home sales in February dropped by 9.8% compared to the previous year, while the average home price fell by 3.3%. This slowdown is not just a year-over-year comparison; it is also evident when looking at the month-over-month activity, with newly listed properties declining by 12.7% compared to January.

Mortgage expert Penelope Graham of Ratehub.ca noted that the market was expected to be robust this spring, but the introduction of tariffs has changed the narrative. The uncertainty surrounding these tariffs, announced on January 20, has created a gap between current home sales and those of the previous year, a trend that widened throughout February. By the end of the month, Canada had accumulated nearly five months’ worth of housing inventory, a clear indication of a cooling market.

Economic Factors and Consumer Sentiment

The Canadian economy entered 2025 on a relatively strong footing, with inflation hovering around the Bank of Canada’s target rate of 2%. The central bank had also implemented six consecutive interest rate cuts, making borrowing more accessible for Canadians. However, the housing market slowdown coincided with Trump’s inauguration and the subsequent tariff announcements, which have introduced significant uncertainty into the economy.

Clay Jarvis, a mortgage expert at NerdWallet Canada, described the spring housing market as “dead on arrival.” He pointed out that the uncertainty will likely persist into March, with the possibility of additional tariffs on April 2. This instability has spooked potential buyers, many of whom are wary of committing to a 25-year mortgage when they cannot plan for the next six months. Jarvis emphasized that while the desire for homeownership remains strong, many Canadians are hesitant to take on a mortgage during such uncertain times. “People want to buy homes,” he said. “It’s Canada. People see homes as a major investment. They see it as their retirement. People want homes. They just don’t want to be shackled by a mortgage at a time when they don’t know if they’re going to have a job three to six months from now.”

Sellers Face a Challenging Market

For sellers, the situation is equally daunting. Many had been waiting for the spring market, hoping to capitalize on higher prices and multiple offers. However, with the current level of uncertainty, the traditional spring market—characterized by bidding wars and homes selling above asking price—may not materialize this year. According to Jarvis, any seller who is inflexible on their price should be prepared for a slow market. “It’s not a function of their homes. It’s not a function of the location. It’s just a function of uncertainty,” he explained.

Rishard Rameez, CEO of Toronto-based realty group Zown, added that some sellers may need to reconsider their expectations. “We might not see that spring market where prices are going for above asking, where we’re seeing multiple offers—the usual spring market in Canada. I don’t think we are going to see that if the situation continues to unfold the same way that it has been for the last few weeks,” he said. Graham also noted that some buyers and sellers may choose to wait out the uncertainty if they have the flexibility to do so. “For those buyers and sellers who have the flexibility to wait a little bit longer on their decisions, they are choosing to do that because there’s just so much uncertainty right now. Nobody wants to be making a big financial move if they don’t need to,” she said.

Opportunities for Buyers in a Slower Market

While the current market presents challenges, it also offers opportunities for certain buyers. Shawn Zigelstein, a broker at Royal LePage, pointed out that for those on solid financial footing, this could be a good time to enter the market. “Inventory levels are up. We’re seeing that across the board nationally. They’ve got the opportunity to go into these properties, negotiate, find the best place for them, the best deal for them,” he said.

Graham also highlighted the absence of bidding wars in some markets, which could benefit buyers. “Depending on where you’re buying, things might be a little bit less competitive than they would have been in previous months. You might not encounter things like bidding wars and might get a better price on that home,” she said. Additionally, with borrowing costs at historic lows—variable mortgage rates as low as 3.95% and five-year fixed rates at 3.89%—buyers can secure favorable financing terms. Graham also noted that for those renewing their mortgages, the current low rates are a welcome relief compared to the elevated rates of just six months ago.

Navigating the Market: Insights for Sellers and Buyers

For sellers who need to sell, the current market requires a strategic approach. Jarvis advised that sellers who are firm on their prices should be prepared for a slow market. “It’s not a function of their homes. It’s not a function of the location. It’s just a function of uncertainty,” he said. Rameez suggested that sellers looking to upsize might still find opportunities. “If a seller is looking to upsize, that’s their motivation to sell their property, they might be better off taking that loss on the initial purchase,” he said, as they may secure a good deal on a larger home.

For first-time buyers, particularly millennials and Gen Z, the condo market presents an attractive option. Graham noted that condo inventory is high, with prices having declined significantly over the past six months. This makes condos, which are often the entry point for first-time buyers, a viable choice. Zigelstein also encouraged buyers who can afford to ride out the current uncertainty to consider purchasing now. “They always say that most money is made in slower markets,” he said. “For people that are willing to be decisive and willing to take that chance to purchase a property and [take] short-term pain for long-term gain, they will see those increases in the next coming years.”

The Road Ahead: A Nation in Limbo

As the housing market continues to navigate the uncertainty caused by tariffs and economic instability, one thing is clear: this is not a typical spring market. While some buyers and sellers may find opportunities in the current climate, others will need to wait and see how the situation unfolds. As Jarvis so aptly put it, “It’s not a function of their homes. It’s not a function of the location. It’s just a function of uncertainty.”

The Canadian housing market has always been resilient, and experts agree that it will rebound. However, the timing and strength of that rebound remain uncertain. For now, buyers and sellers alike must navigate this uncharted territory with caution and a long-term perspective. As Zigelstein said, “The market will rebound. The market will come back. Will it be as crazy as it has been in certain peaks that we’ve had? We don’t know. We don’t know what to expect at this point. And we don’t have a crystal ball. But at the same time, that’s when people make their money in real estate.” For those willing to take the plunge, the rewards could be significant.