“Homebuyers may have to wait years for the market to rebound”: A Toronto realtor explains the brutal toll of Trump’s tariffs
Construction costs are up, jobs are at risk, developers have adopted a holding pattern and supply keeps dwindling. This expert has advice
Donald Trump’s roller-coaster trade war with Canada has floored Toronto’s real estate industry. Tariffs and uncertainty are putting housing targets in jeopardy, and the city may defer condo development fees to ease the burden on builders. Amid fears of both a recession and market collapse, the Bank of Canada cut its key interest rate to 2.75 per cent this week. And all of this means chaos for would-be buyers and sellers. Here, Toronto realtor Tom Storey explains the ongoing pain of Trump’s tariff threats, offers tips on how to navigate condo-industry insanity and predicts what the market may look like by year’s end.
How will Trump’s tariffs and Canada’s counter-tariffs affect the Toronto real estate market? It all depends on how long they last. If they stay in place for an extended period, construction costs will rise across the board, making new builds more expensive. That could drive up the value of existing homes just because fewer new ones would be built. If tariffs trigger job losses—especially in industries directly impacted by them, like lumber and steel—then you could see the opposite effect: less demand and lower home prices because people have less to spend. Unemployment is the key factor to watch. If more people are out of work, it won’t matter what’s happening with housing supply.
How much do you think construction costs will rise? It’s going to be massive. Before these tariffs, new condo sales in the GTA were already sluggish. If steel and other materials continue to get more expensive, even more projects will be put on hold. But the real impact won’t be immediate. It may be the case that some housing projects never break ground. By 2028, Toronto could be facing a supply shortage far more severe than today’s.
You mentioned that the condo market was stalled before Trump’s election. What was causing that? There are two main reasons. First, condos were largely being bought by investors, not end users. With interest rates soaring post-pandemic and rental prices now softening, those investments no longer make financial sense. If an investor can’t generate a positive cash flow, they won’t buy. Second, the price gap between new and resale condos is vast. A five-to-10-year-old condo may sell for up to $1,000 per square foot, while new builds downtown are currently starting at roughly $1,500. That disparity never made sense.
Have you already seen demand for housing spike? Absolutely. That’s because the Toronto market has a disconnect between what’s available and what many buyers actually want. Much of the new condo supply is of one-bedroom units. Families, on the other hand, want freehold properties—especially townhouses and semis, which offer more space while still being cheaper than detached homes. The problem is that we haven’t been building enough of those freeholds because they’re not as lucrative for developers or investors. Now, with tariffs driving up costs, meeting that demand will be even harder. Many would-be buyers will now likely hold off on purchasing condos and will perhaps wait years for the market to rebound.
Are developers rallying? Most had already pulled back on new projects before the tariff threats. The numbers didn’t make sense then, and Trump’s policies will only make things worse. Typically, developers can’t secure financing to start construction until they’ve pre-sold about 70 per cent of their units. Right now, there’s little confidence that they will be able to reach that threshold, so most have adapted a holding pattern. Some developers are shifting toward purpose-built rentals instead of condos. But even those projects are barely viable financially given potentially rising costs.
Will the rest of the year also be this bumpy? Conditions will vary depending on the type of property. The condo market is flooded with inventory, giving buyers plenty of options, so prices will likely remain flat or dip slightly. Detached homes, meanwhile, are in a balanced market, meaning prices should stay steady. Semis and townhomes, however, are in short supply and high demand, so they’ll likely stay competitive. But the biggest impact of tariffs may be on overall sales activity. If uncertainty prevails, fewer people will feel confident making big financial decisions.
What was your reaction to the Bank of Canada’s rate cut this week? I wasn’t surprised. Inflation is relatively low, and the economy has been slowing, so this was expected. The real question is: How many more cuts will we see in 2025? A lot of economists believe we’ll get to a 2.5 per cent rate—maybe lower—by year’s end. If tariffs stick around and weaken the economy, the Bank of Canada may have to cut even more aggressively than they once planned.
And what should the government be doing right now to save the housing market? There are a few things they could consider. The federal foreign ownership ban on Canadian housing, for example, runs until 2027. Some people are now questioning whether we should lift that earlier to allow more outside money into the market, which could help get new developments off the ground. The other big thing is the mortgage stress test. Right now, buyers have to qualify at a mortgage rate that’s either 5.25 per cent or two per cent higher than the rate they’re actually getting. That’s locking a lot of would-be buyers out of the market. If the government lowered the stress test threshold by a point, it might help increase activity.
Any advice to buyers and sellers right now? It depends on your motivation. For buyers, the key is to focus on the long term rather than getting caught up in week-to-week fluctuations. If you’re buying a property, go in with the expectation that you’ll hold on to it for at least five years. Don’t expect it to skyrocket in value within a couple of years like we saw in the past. Those days aren’t coming back any time soon. If you’re selling just to cash out, you might want to wait and see what happens. But, if you’re selling or buying because of a life change—maybe you had another kid and need more space—you should make your move. Don’t let the market noise paralyze you.
This interview has been edited for length and clarity.
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Ali Amad is a Palestinian-Canadian journalist based in Toronto. His work has appeared in publications including Toronto Life, Maclean’s, Vice, Reader’s Digest and the Walrus, often exploring themes of identity, social justice and the immigrant experience.
