How Tariffs Could Impact Toronto Real Estate: What Buyers & Investors Need to Know
New tariffs on building materials are currently in effect, and if you’re buying or investing in Toronto real estate, you might be wondering: What does this mean for me?
We’re breaking down how these tariffs could impact the market in the coming months, including the knock-on effects on home renovation costs, interest rates and property values in different price points.
It's not fear that will help you get ahead of this moving market, it's smart decisions and a good strategy. We're here to help,
President Donald Trump’s sweeping tariffs on imports from Canada, Mexico and China took effect on March 4th.
Tariffs and Interest Rates: The Domino Effect
Tariffs on goods like steel, lumber, and other building materials drive up costs for developers and home renovators - this one touches anyone with a renovation project on the horizon.
Homeowners looking to renovate in Toronto may face some sticker shock. With material costs surging, renovation budgets need to be adjusted.
Sellers considering updates to boost property value will want to be more discriminating about choosing the updates that will make the biggest impact to the bottom line and to look for detailed quotes in advance to understand cost changes.
The other layer to these increased costs is: inflation. Higher costs can lead to increased inflation, which puts pressure on the Bank of Canada to keep interest rates higher for longer.
This could make borrowing more expensive for buyers and investors, impacting affordability and market activity in the short term.
Short-Term (3-6 Month) Impact on Toronto Real Estate
First-Time Home Buyers (Under $1.3M):
This segment is among the most impacted by higher interest rates, as first-time buyers are often stretching to afford their first home.
If borrowing costs remain high due to tariff-driven inflation, affordability will become a bigger challenge, potentially leading to decreased demand in this price range.
However, this could create opportunities for buyers who are financially ready, as competition might ease slightly and sellers may become more flexible on pricing and conditions.
Government incentives or first-time buyer programs could play a role in keeping demand stable, but overall, buyers should be prepared for a market that requires careful financial planning.
Condos (Resale & Pre-Construction):
In the resale condo market, the potential of higher interest rates could mean a (continued) slowdown, particularly for investors relying on financing. That said, as the pre-construction market stalls the resale market is likely see an uptick in demand.
Pre-construction condos might see more hesitation from buyers as developers raise prices due to higher building costs. Some projects could be delayed, reducing future supply and potentially driving up resale condo values in the long run.
Single-Family Homes Under $2.5M:
This segment is the most rate-sensitive. If interest rates increase due to tariff-driven inflation, some buyers may pause their search or adjust their budgets downward.
Currently demand remains strong for well-located homes, especially in family-friendly neighbourhoods where inventory is tight.
Expect sellers to adjust pricing expectations if sales activity slows, but competitive properties will still attract buyers.
Luxury Homes Over $2.5M:
This market is less sensitive to interest rates since many buyers purchase with cash or have significant equity.
The biggest impact here could be buyer sentiment. If the economy shows signs of strain due to inflation or trade tensions, high-net-worth buyers may wait for more stability before making moves.
Still, prime Toronto neighbourhoods remain desirable, and well-priced luxury homes will continue to trade.
What’s Next?
Toronto real estate has proven its resilience time and time again. While tariffs may create short-term market ripples, the fundamentals—strong population growth and limited housing supply—remain intact.
As always, navigating these shifts requires expert guidance. Whether you're looking to buy, sell, or invest, we’re here to help you make informed decisions in any market condition.
Thinking about making a move? Let’s chat. Reach out to Tori or KJ anytime, we would love to connect.
