Jittery potential buyers in Canada’s real estate market may be more willing to concentrate on house hunting now that the federal election is in the past and the spring selling season is reaching its traditional peak.
Still, in cities around Ontario’s Greater Golden Horseshoe, move-up buyers are rare and first-time purchasers are wary, real estate agents say.
Robert Hogue, assistant chief economist at Royal Bank of Canada, says weakening labour markets and U.S. tariffs threatening to strike the province’s economy hard have significantly soured market sentiment.
“Concerns about the potential economic hit from U.S. tariffs have clearly unsettled buyers in the past two months,” Mr. Hogue says in a note to clients.
While many aspiring buyers have hit pause on their search for a home, the supply of existing homes for sale, meanwhile, continues to swell, he points out.
“Buyers are able to extract price concession from sellers with more options to choose from amid a murkier economic landscape.”
The market pullback is mainly concentrated in Southern Ontario and British Columbia because the lack of affordability made the nascent recovery especially vulnerable to a loss of confidence, Mr. Hogue says.
In Hamilton, tariff talk halted the momentum that started in the opening weeks of 2025, says Melissa Carrington, real estate agent at Keller Williams Complete Realty.
“It just died,” she says. The question became, “do I qualify for a passport to where my parents were born?”
In late April, some first-time buyers resumed their search but remained guarded.
She points to one property which was listed with an asking price of $599,000. The sellers received four offers, but the successful bidder paid only $10,000 above asking.
Ms. Carrington recently represented buyers who purchased a property with an asking price of $399,000 in the small town of Delhi, Ont., located southwest of Hamilton in tobacco farming country.
Multiple offers landed but the buyers were able to strike a deal at less than the asking price.
In the Hamilton-Burlington area, many more expensive properties have been languishing.
“We see price reductions happen every week,” she says.
In Hamilton, workers in the steel and manufacturing industries have been especially unnerved by the trade war.
Homeowners who are worried about the economy and their jobs are usually able to hold onto an existing property, Ms. Carrington says, but people are not trading up.
“They’re more hunkering down than making any big moves,” she says. “They’re trying to ride it out.”
Sales in Hamilton-Burlington improved in March with an eight per cent rise on a seasonally-adjusted basis from February, according to the Canadian Real Estate Association.
New listings edged up 1.6 per cent in March from the previous month and the average price increased 4.9 per cent.
Ms. Carrington cautions that the average price may have been lifted by one or two sales at the high end. In communities such as Ancaster, for example, some luxury properties trade hands at prices far above the average.
“If a couple of those big-dollar homes sell, it skews the numbers.”
The average price of $874,137 in March edged down 1.4 per cent compared with the same month last year.
First-time buyers are also the most active participants in the market in suburban areas east of Toronto, says Shawn Lackie, real estate agent with International Realty Firm.
The trade war has cast a gloom in Durham Region because heavyweight General Motors employs thousands at its assembly plant in Oshawa, Ont., where workers make Silverado pickup trucks for export to the United States.
GM workers live throughout the area in towns as far as Port Perry, Blackstock, Lindsay and Peterborough, Mr. Lackie says.
The average price in Durham stood at $911,396 in March, which was slightly higher than the average of $897,759 recorded in February. Compared with March, 2024, the average price dipped 2.6 per cent.
Mr. Lackie recently worked with first-time buyers who looked at a detached home listed with an asking price of $769,000. They decided not to make an offer, and later learned the house drew 22 bids and sold for $920,000.
The buyers were cautious about overpaying, so they decided not to join the bidding contest for a semi-detached house in northeast Ajax listed with an asking price of $789,000.
When the 1,200-square-foot home, built in 2009, did not sell on offer night, Mr. Lackie’s clients decided to submit an offer the following day.
Mr. Lackie recommended that the buyers offer the full asking price, and advised the listing agent that that was as far as their budget could stretch.
“She ran through that stop sign and she signed it back at $815,000,” he says.
Mr. Lackie learned that the sellers were hoping for $850,000.
In the end, the two sides were able to strike a deal, but the negotiations were arduous, says Mr. Lackie.
“This is the thing that just blows my mind about the market right now – there’s no rhyme or reason,” he says of sellers’ expectations.
Mr. Lackie says buyers are wise to avoid getting carried away and paying too much for a house that has been polished up to show well.
“Fall in love with the house when the cheque clears,” he says. “You have to be prepared to walk away.”
Some sellers are still stuck in 2020, he says, looking for prices that their neighbour received when buyers were motivated by “fear of missing out.”
“Bill made off with an extra $300,000 because someone came along who was willing to throw that at him,” he says. “They had buyer’s remorse, but it was all covered up with the relief.”
Sales in Kitchener-Waterloo and nearby areas such as Cambridge and Guelph, Ont., are also a little more lively after a lull in the first quarter, says Faisal Susiwala, broker at Re/Max Twin City Faisal Susiwala Realty,
In late April, the segment between $600,000 and $1-million was moving well, says Mr. Susiwala, who tallied seven transactions in 10 days.
In the Kitchener-Waterloo area, sales dipped 1.7 per cent in March from February on a seasonally adjusted basis, according to CREA.
The average price in Kitchener-Waterloo stood at $776,273 in March, which marks a 4.6 per cent drop from the same month last year.
The average price slipped 2.7 per cent in March from February.
The federal government’s more restrictive immigration policy, including a cap on international students, has not had a large impact on home sales in the area, he says, because most new arrivals to Canada rent until they are more established.
One weak spot in the area’s housing market is the category of recently completed homes that were purchased in preconstruction in 2020, 2021 and 2022, Mr. Susiwala says.
Some purchasers paid around $1.4-million, but values have fallen and interest rates have risen since they agreed to that amount on paper.
Some tried to forfeit their deposit and walk away, Mr. Susiwala says, but the builders threatened to sue and place a lien on the property or a principal residence.
To make matters worse, the builders then became competitors by selling their remaining inventory in the same subdivisions at lower prices. That in turn led to appraisals that came in at $1.1-million or $1.2-million compared with the $1.4-million some purchasers had agreed to pay a few years earlier.
Many of the purchasers, unable to sell the property for the price they paid, turned to the rental market, Mr. Susiwala says.
In order to cover carrying costs of $12,000 to $15,000 a month, some homeowners are putting 10 or 12 students into each property.
“They’re unfortunately turning these subdivisions into rooming houses,” he says. “It’s an act of desperation on the part of the homeowner.”
The unsold inventory does have a spillover into the resale market, Mr. Susiwala says, because if a property has been sitting for 120 days with no offers, a seller new to the market will have to undercut that asking price.
Looking ahead, Mr. Hogue at RBC predicts prices in Ontario and British Columbia will continue to slump in the near term given that market balance strongly favours buyers.
If that tilt toward buyers continues, the economist expects even larger declines.