Canadian real estate markets are further buckling under trade war anxieties, with RBC Economics telling investors that there’s no near-term recovery. National data has yet to arrive, but they observed plummeting sales and rising inventory in all of Canada’s major markets in April. RBC warns market cracks are emerging, and there’s no meaningful rebound on the horizon.
Trade War Fuels Canadian Real Estate Market Freeze
Annual change for April 2025. In percentage points.
Source: RBC Economics; REBGV; FVREB; CREB; RAE; TRREB; QPAREB.
Canada’s largest bank has seen the trade war amplify the real estate market slowdown. Potential economic fallout is sending sellers to list while buyers wait for clarity before making the biggest purchase of their life. Canada’s priciest markets—Southern Ontario and BC—are also the most vulnerable.
“Southern Ontario and parts of British Columbia—the country’s least affordable areas—are seeing sharper pullbacks in activity and weakening home prices as a result,” explains Robert Hogue, assistant chief economist at RBC.
Adding, “Property values are coming under growing pressure amid rising inventories and soft demand. Bargaining power has shifted in the buyer’s favour in Vancouver, Fraser Valley, Toronto and other southern Ontario markets.”
The bank explains that the economy got some positive news last month: the US spared Canada from additional tariffs, helping to boost market confidence. “However, we don’t see a meaningful rebound as long as trade uncertainty lingers,” warns Hogue.
RBC’s outlook for Canada’s largest real estate markets is bleak.
Toronto Real Estate Downturn Deepens: Price Declines Expected
Toronto real estate’s downturn is deepening as confidence erodes and supply climbs rapidly. The bank warns April sales were the weakest in 30 years (outside of the 2020 lockdown), marking the second-straight month of near-record low activity. A sharp influx of sellers is finding no buyers, leading to the worst demand balance since the early 90s. They’ve also observed some sharp price cuts.
“Indeed, a material correction in property values is now underway. Toronto’s composite MLS HPI fell in five of the last six months, down -0.7% between March and April, and -4.4% ($49,000) since December to $1.07 million,” explains Hogue.
His outlook confirms what many experts know but were hoping not to hear: “We expect prices to continue falling in the near term as sellers fiercely compete to get deals done, while trade worries weigh on sentiment.”
Vancouver Real Estate Demand Balance Shifts, Losses To Accelerate
Vancouver real estate fared much better than Toronto against rate hikes, but it may be running out of lives. The board’s latest data shows a sharp influx of sellers who are discovering a complete lack of buyers. Home sales are stable at a 2-year low, but rising inventory is starting to wear at prices. According to their calculations, prices have slipped for the past 4-months, leaving them 1.8% lower than last year.
Not exactly a life-shattering downturn but it may just be the beginning. “We think buyers will continue to use their power to extract price concessions from sellers in the months ahead—quite possibly at an accelerating pace,” warns the bank.
Montreal Real Estate Is Holding Up, But Demand Balance Weakens
Montreal real estate is holding up surprisingly well against trade anxieties, but it isn’t immune. Home sales fell 12% in the first two months of the year, but were stable in April (-0.2%). However, selling is accelerating and buying isn’t—a potential headwind for price stability.
Home prices remain in positive growth territory but weakening demand balance will weigh heavily. “… we see the rate of increase slowing in the months ahead as supply-demand conditions continue to tilt in the buyer’s favour,” explains Hogue.
Calgary Real Estate Prices Make First Annual Drop Since 2020
Calgary real estate is finally cooling, with the bank noting sales have fallen to a 5-year low. A 3-month drop in demand is meeting rising inventory. Consequently, home prices printed the market’s first negative annual growth since 2020.
The region’s market resilience is seen eroding for as long as trade war uncertainty remains. “We see further mild declines ahead as the re-balancing process continues,” says Hogue.
RBC’s grim outlook for Canadian real estate is the exact opposite of what experts saw in 2025. Cheaper financing and more inventory are positives for buyers, but no one wants to catch a falling knife. Until trade war anxieties ease and relations stabilize, sellers may be in for a painful near-term outlook. On the upside, buyers currently hold all the cards, and that means they’re much better positioned to drive lower prices.
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