The Canadian economy is facing potential turbulence as the United States considers imposing 25% tariffs on Canadian imports. If these tariffs take effect, they could have far-reaching economic consequences, particularly in Calgary’s real estate market. From increased construction costs to shifts in housing demand, home buyers, sellers, and investors should understand how these changes might impact property values and market trends.
What Are the Proposed U.S. Tariffs?
The U.S. government is exploring a 25% tariff on Canadian goods, which would significantly increase costs for industries that depend on cross-border trade. Key sectors that could be affected include:
- Lumber and construction materials (impacting home building costs).
- Oil and gas (a critical driver of Calgary’s economy).
- Automotive and manufacturing (affecting employment levels).
If these tariffs are implemented, Canada’s GDP could shrink by 2.6%, potentially triggering a recession. Since economic conditions are directly linked to Calgary home prices, mortgage rates, and housing demand, these changes could reshape the local real estate market.
How Could U.S. Tariffs Affect Calgary’s Housing Market?
1. Higher Construction Costs → More Expensive Homes
One of the most immediate impacts of a U.S. tariff on Canadian goods would be higher construction costs. The real estate sector relies on lumber, steel, aluminum, and other building materials, many of which are either exported to or imported from the U.S.
If tariffs drive up material costs:
- New home prices in Calgary could rise, making it harder for first-time buyers to afford property.
- Renovation and home improvement costs may increase, affecting homeowners looking to upgrade.
- Developers may delay or cancel new projects, limiting supply and pushing housing prices higher in the long run.
This would disproportionately affect Calgary’s new home construction market, particularly in fast-growing communities like Mahogany, Seton, and Livingston.
2. Economic Slowdown Could Lower Housing Demand
A 25% tariff could push Canada’s economy into a recession by mid-2025, according to economic analysts. If Calgary experiences job losses, wage stagnation, or slower growth, this could have a cooling effect on housing demand.
Potential outcomes include:
- Slower home sales as fewer buyers qualify for mortgages.
- Price corrections in certain areas, especially in higher-priced neighborhoods like Aspen Woods, Mount Royal, and Britannia.
- Reduced investment in Calgary real estate, as foreign and domestic investors may hesitate in an uncertain economic climate.
If demand drops significantly, some buyers may find better deals on Calgary homes for sale, particularly in the condo market, where inventory levels remain high.
3. Interest Rates Could Be Affected
The Bank of Canada’s response to economic uncertainty will play a critical role in shaping Calgary’s real estate market.
Two scenarios could unfold:
- If tariffs drive up inflation, the Bank of Canada may delay interest rate cuts, keeping mortgage rates higher for longer.
- If tariffs cause a recession, the Bank of Canada may cut rates to stimulate the economy, making homeownership more affordable.
For buyers waiting on lower mortgage rates to purchase a home in Calgary, economic policy changes will be key in determining affordability.
4. The Rental Market May See Increased Pressure
If home prices and mortgage rates remain high, more Calgarians may turn to renting instead of buying. This could put upward pressure on rental prices, particularly in high-demand areas like Downtown Calgary, Beltline, and Kensington.
Potential rental market trends include:
- Higher demand for condos and townhomes, as buyers delay purchases.
- Increased competition for rental properties, leading to rising rents.
- Landlords benefiting from stronger rental yields, particularly in areas with low vacancy rates.
Investors considering Calgary rental properties may find opportunities in the multi-family sector, as demand for rental housing continues to grow.
