Canada's housing market in early 2025 is facing a strange mix of signals. On one hand, buyers are waking up to an unexpected trea: a significant 11 percent surge in new listings. It's like stumbling upon a hidden stash of goodies in a usually barren landscape. But lurking just around the corner is a less welcome surprise: the "tarrifying" threat of a trade war with the U.S., thanks to proposed tariffs. This isn't your typical market shift, it's got a bit of an unsettling, undead vibe. Let's dig into what's happening and see if we can make sense of this unusual situation.

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A Buyer's Market Stirring?  Listings Rise by a Spooky 11%!

January 2025 brought a jolt to the market: new listings jumped a surprising 11 percent compared to December. That's the biggest monthly increase in new supply in a long time, pandemic quirks aside. It suggests sellers are feeling a bit spooked, perhaps sensing economic trouble ahead and deciding to list now. Regions like British Columbia and Ontario, known for their fiercely competitive markets, are seeing the biggest impact from this listing surge. Suddenly, buyers have a bit more breathing room, a little more power at the negotiating table.

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Sales Soften as Tariff Fears Creep In: Down 3.3%

But here's where things get a little eerie. While the supply of homes is growing, buyer enthusiasm seems to be… waning. National home sales dipped by 3.3 percent in January. And the timing is telling: the sharpest drop happened in the last week of January, just as those "tarrifying" tariff headlines started dominating the news. It's hard to ignore the connection. re buyers getting cold feet, worried about the economic chill a trade war could bring? While sales are still slightly up 2.9 percent compared to last year, there's a definite sense of unease creeping into the market.

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Prices Holding… For Now?  A Barely-There Dip of 0.08% in MLS HPI

Now for the really strange part: prices are stubbornly… stable. The MLS Home Price Index (HPI) barely budged, down just 0.08 percent month-over-month. Year-over-year, it's still inching upwards, by 0.07 percent. The average home price in January hit $670,064, a 1.1 percent increase from last year.  But this stability feels a bit precarious, like a house of cards in a windstorm. If those "tarrifying" trade war fears become reality, this price equilibrium could be shattered pretty quickly.

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Regional markets are telling their own versions of this story:

• British Columbia and Ontario: The 11% listing surge is definitely shifting these markets towards buyers. Prices are showing signs of softening, and the tariff uncertainty is adding to the cautious mood.
• Alberta and Saskatchewan: Despite the broader anxieties, these provinces are still holding relatively firm, thanks to lower inventory. But even here, the trade war threat is a potential dark cloud on the horizon.
• Quebec and Atlantic Canada: These regions are aiming for a more balanced market in 2025, but they won't be immune if a trade war sends economic shivers across the country.

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A Potential 25% Economic Hit

Let's face it, the elephant in the room – or maybe the zombie in the forest, given our image – is the potential trade war. Those proposed U.S. tariffs are serious: 25 percent on most Canadian exports, and 10 percent on energy. The temporary delay is just that – temporary. If these tariffs are implemented, it could be a major economic blow to Canada, potentially leading to job losses, wage stagnation, and a definite dampening of housing demand, especially in regions heavily reliant on trade.

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The Canadian Chamber of Commerce’s Business Data Lab has pinpointed the cities most exposed to these tariffs:

• Saint John: Extremely vulnerable due to its oil export focus, facing a potential 25% tariff impact.
• Calgary: A key energy and beef exporter, at risk of tariffs up to 25% on major commodities.
• Southwestern Ontario (Windsor, Kitchener-Cambridge-Waterloo, Brantford, Guelph): The heart of Canadian auto and manufacturing, facing potential 25% tariffs that could disrupt vital cross-border trade.
• Hamilton, Ontario: Canada's steel center, directly threatened by potential 25% tariffs on steel exports.
• Quebec’s aluminum and forestry hubs (Saguenay, Trois-Rivieres, Drummondville): Major exporters of aluminum and forestry products, facing tariffs up to 25%.

This isn't just abstract economics, it's real-world risk for the housing market. Job losses in these areas mean fewer people buying homes, properties taking longer to sell, and potential downward pressure on prices. The "tarrifying" tariff prospect is injecting a dose of serious caution into the Canadian housing market.

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Spring Market Outlook: 8.6% Sales Growth…  Or Will Trade Wars Spoil the Spring?

Despite the looming trade uncertainty, CREA is still holding onto some optimism for the spring market. They're forecasting an 8.6 percent increase in home sales for 2025, reaching around 532,704 units, driven by lower borrowing costs and pent-up demand. Average prices are still projected to rise 4.7 percent to $722,221 by year-end. However, it's crucial to remember this forecast was made before the full weight of trade war anxieties settled on the market. The spring rebound might be more muted than anticipated if trade tensions escalate.

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A Market Balancing Opportunity and Undead Risk

The Canadian housing market in early 2025 is at a critical point. The 11 percent listing surge offers potential for buyers, while sellers are facing a more competitive and uncertain landscape. The "tarrifying" trade war threat is a significant factor, potentially overshadowing even the positive effects of lower rates and pent-up demand. Navigating this market successfully requires a clear understanding of the data, a realistic view of the risks and opportunities, and a flexible strategy for both buyers and sellers. The direction of the spring market hinges on whether trade war fears materialize into economic damage, or if diplomatic solutions can ease market anxieties and restore confidence.