Even if you want to try and avert your gaze from the tariff talk that is dominating headlines this week, it is hard to ignore the reality of how ruinous the tolls will likely prove to be for Canada.
Despite our various leaders’ attempts to mimic Donald Trump’s bombastic patriotism (including in the form of retaliatory levies), the damage to the Great White North’s economy is already being felt. While sectors like the auto industry are among those hit hardest, there are also set to be huge impacts to the real estate market, among others.
As Ontario Premier Doug Ford said during the initial countdown to tariffs last month, “the coming days and weeks will be incredibly difficult. Trump’s tariffs are going to devastate our economy and will put up to 450,000 jobs at risk from every sector in every region. No one will be immune, everyone will feel the impact.”
Now that a 25 per cent tax has been added to virtually all goods Canada sends into the U.S. (10 per cent for energy and energy resources), representatives from industries of all stripes are bracing for the worst. Among them is the Ontario Home Builders’ Association (OHBA), which fears that Trump’s “extremely concerning” move could potentially “decimate” the already flailing home market.
Ontario real estate downturn continues as developers drop new projectshttps://t.co/fDsOr53o93
— blogTO (@blogTO) September 17, 2024
“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,” the group, which represents residential construction firms in the province, wrote in a statement Tuesday.
It noted that even the ongoing threat of the tariffs, delayed from last month, already created “considerable” uncertainty and harm to the sector in a time when real estate sales — especially for pre-construction homes, and even moreso, pre-construction condos — have already been at dismally low levels for many months.
Last year, the organization cites that 16 per cent fewer residential projects kicked off in Ontario, all while governments at all levels have been urging for more homes, faster to accommodate our rapidly-growing population and seemingly insatiable demand. In certain cities, such as Guelph and Brantford, this drop has been as much as 60 per cent from 2023 to 2024.
Sky-high (though falling) lending rates and costs of living, paired with general economic tumult, have all but killed market interest, with investors — who traditionally own a huge proportion of new condos, at least in the GTA — now facing the prospect of losing money on units.
Between 2022 and mid-2024, more than 24,000 homes across dozens of forthcoming complexes were put on ice due to lack of presales and thus funds to build, a number that has grown as more and more projects aren deferred or even sold off to the highest bidder after receivership orders, with developers defaulting on building loans as the market stagnates.
Toronto seeing most new home listings in Canada but hardly anyone is buying https://t.co/zwVWkjWtUV
— blogTO (@blogTO) February 23, 2025
“Where available financial capital cannot get a reasonable return, it usually flees the jurisdiction. This will not be good for Ontario or Canada,” the OHBA writes, also pointing out that construction costs will likely surge as the dollar depreciates and the manifold effects of tariffs take hold, adding further pressure on those pursuing new builds.
“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.”
