Real Estate Isn’t Just About Bricks, Mortgages & Neighbourhood Trends
Real estate isn’t just about bricks, mortgages, and neighbourhood trends. Increasingly, it’s about policy corridors, regulatory headwinds, and trade winds from beyond our borders.
Over the past year, shifts in all three have begun to reshape real estate in Canada—residential, commercial, and investment alike. As someone who lives, breathes, and works in this space, I’ve been watching these changes with both concern and curiosity. Here’s what’s happening, why it matters, and where things might go.
Key Developments to Understand
- Tariffs, Trade Tensions & Uncertainty
The U.S.-Canada relationship has been under stress lately. New U.S. tariffs on Canadian goods—steel, aluminum, autos—and Canada’s retaliatory measures have created ripple effects. Businesses that depend on cross-border supply chains are facing higher input costs. Forecasts are being pulled forward in some cases (i.e. companies shipping early to beat future tariffs), only to be dragged down when the uncertainty sets in. - Regulatory Moves On Housing & Interprovincial Trade
On the domestic front, regulation aimed at easing supply constraints, increasing housing affordability, and improving mobility between provinces is gaining traction. For example, the One Canadian Economy Act (Bill C-5) has passed, which includes a Free Trade and Labour Mobility component and aims to remove interprovincial trade barriers.
Also, CMHC’s 2025 housing market outlook points to immigration changes and foreign trade risks as core uncertainties, which naturally affect both supply (e.g. labour, materials) and demand (population growth).
- Monetary Policy & Inflation Pressures
Central banks aren’t ignoring these dynamics. The Bank of Canada has indicated that tariffs are contributing to inflation for imported and domestically used goods—adding stress to regulatory goals around affordability. High input costs in construction and materials feed into housing starts and finish costs. Meanwhile, interest rate expectations continue to influence both investment yields and buyer demand.
How These are Impacting Real Estate
Putting theory to practice: how is all this shaking out on the ground?
- Slowing demand & falling confidence
With business uncertainty rising (thanks to trade and regulatory ambiguity), buyers—especially speculators or investors—are pausing or pulling back. Some forecasts have seen home prices decline or stagnate. For example, a Reuters expert poll estimates around a 2% drop nationally in 2025 for Canadian house prices. - Dampened residential construction & uneven starts
Developers are wary. Rising materials cost + regulatory delays (permits, approvals) + labour supply constraints = tighter margins. As a result, housing starts are expected to slow between 2025–2027, particularly for high-rise condos. But ground-oriented housing (detached, semi, row homes) may fare somewhat better in more affordable markets. - Rental markets & vacancy shifts
Demand for rentals remains strong, partly driven by slowed homebuying. However, with more purpose-built rental apartments coming online in many markets, vacancy rates are expected to rise gradually. That should cool rent growth somewhat, easing some of the affordability pressure for renters. But this moderation won’t be uniform. High-cost, fast growing metros will likely lag. - Commercial real estate (CRE) feels a double-whammy
CRE is sensitive both to trade (supply of goods, industrial demand) and regulation (zoning laws, environmental/climate risk regulations). Tariff-induced cost increases in imported building materials or machinery, plus uncertainty about regulatory regimes (especially around labour and environmental compliance) can delay projects, increase capex, and reduce returns.
What This Means for Investors, Developers & Realtors
Here are a few emerging strategies and warnings that I think are worth considering (some counterintuitive, some obvious—but important).
- Look for regulatory certainty
Markets hate not knowing what’s coming. Projects in municipalities or provinces with clearer, faster permit approvals, more transparent regulations, and predictable trade policy will have a competitive edge. That’s a place where you might pay a bit more upfront, but avoid costly delays or losses. - Diversify supply chains & sourcing
Developers need to hedge against import tariff risk. Sourcing local materials where possible, or having backup suppliers, becomes a strategic advantage. Also, paying attention to rising costs in labour, energy, shipping—even “hidden” inputs that get overlooked (equipment parts, finishing materials, etc.). - Be cautious of over-exuberance in certain asset classes
High-rise condos in high-cost metros may take longer to yield returns, under current conditions. Similarly, projects that depend heavily on imported goods or foreign labour might carry more risk now. Whereas ground-oriented housing in mid-tier markets, or rentals, might offer steadier returns under all this turbulence. - Stay very attuned to policy shifts
Changes in immigration targets, housing subsidies, tax incentives, or trade policy can flip risk/reward dramatically. In many cases, policy or regulation will act as both a catalyst or a brake. Being plugged into local government, understanding upcoming bills (like C-5, “Buy Canadian” initiatives), and tracking trade/foreign investment policy will give you a leg up.
What Might Happen Next (Speculation Ahead—Now You Know I’m Speculating)
Here are some possible scenarios. Take these with a grain of salt, as things are still quite unsettled.
- If U.S.-Canada trade relations ease (tariff rollbacks, clearer exemptions), we might see a rebound in construction activity and residential demand by late 2026. That could help prices flatten out first, then gradually rise.
- But if protectionist policies persist or intensify, inflation may rise again for housing inputs, pushing home prices upward even as demand weakens. That could squeeze affordability even more, particularly in high-demand metros.
- Immigration policies will be a wild card. If population growth slows more than expected, housing demand may soften significantly in smaller and medium-sized markets. Conversely, aggressive immigration targets could exacerbate supply shortages if construction lags.
- Regulatory reform—if done right—could unlock significant upside. Removing interprovincial trade barriers, streamlining approvals, aligning regulations across jurisdictions might reduce project timelines and costs, boosting supply and possibly helping affordability.
Policy and regulation aren’t just background noise—they increasingly define what’s possible (and what’s profitable) in Canadian real estate today. For those of us working in the market—realtors, investors, developers—there’s both risk and opportunity in the messiness.
If you lean into the change, anticipate where the pressure will be, and adapt your strategy (instead of hoping things stay as they are), you’ll be better positioned. Regulations may slow you down, trade tensions may rattle you—but those who navigate them skillfully often end up ahead.
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