Potential U.S. tariffs could put a damper on the Toronto housing market this year but the city's real estate board anticipates sales will be up overall compared to 2024 when borrowing costs were higher.Richard Buchan/The Canadian Press
Toronto home sales jumped 10 per cent in January as buyers embraced cheaper mortgage rates, but the local real estate board said potential trade disruptions could curb the momentum in the housing market over the course of the year.
Nevertheless, the Toronto Regional Real Estate Board (TRREB) predicts this year’s sales will be 12.4 per cent higher than 2024’s, when high borrowing costs made it difficult for buyers to get a mortgage.
Now that the Bank of Canada has cut interest rates six times since June, the average five-year fixed mortgage rate is just above 4 per cent, down from about 5 per cent a year earlier.
“A growing number of homebuyers will take advantage of lower borrowing costs,” TRREB chief market analyst Jason Mercer said in a statement accompanying the forecast.
But Mr. Mercer also said “the positive impact of lower mortgage rates could be reduced, at least temporarily, by the negative impact of trade disruptions on the economy and consumer confidence.”
It is too soon to see how the U.S. tariff risk will affect buyer sentiment. Over the past few days, the country has faced tumult. First, it braced for 25-per-cent tariffs on most Canadian goods that were to begin Tuesday, only for U.S. President Donald Trump to postpone them for 30 days in an announcement late Monday.
Before Mr. Trump announced the tariffs on Feb. 1, home sales had been climbing. In January, there were 5,971 home sales in the Toronto region – 10 per cent higher than in December, according to TRREB.
As well, more homeowners put their properties up for sale, increasing new listings by 26 per cent from December to January. Home prices barely budged month-over-month, with the typical home price at $1,089,300.
TRREB said home buying intentions were similar to last year. According to a survey it commissioned, 28 per cent of survey respondents said they were likely to buy a home in 2025. The board predicted that the average home price would rise 2.6 per cent this year, with steeper increases for houses than condos.
“Lower borrowing costs coupled with ample supply will improve affordability and prompt more buyers to move off the sidelines,” the board said in its forecast.
Now, the threats to the domestic economy may introduce a wave of uncertainty.
“The natural feeling is that most people will be very cautious and afraid to make a big purchase,” said Victor Tran, a mortgage and real estate expert with Ratesdotca, a rate-comparison website.