It’s time we face the facts: Canada’s housing market is in a prolonged slump, and the much-needed rebound isn’t coming until 2026. The latest summer housing market outlook from the Canada Mortgage and Housing Corporation (CMHC) makes that crystal clear and while the reasons are many, one major culprit stands out: the lasting ripple effects of Donald Trump’s trade war.
Even though Trump is no longer in office, the damage from years of protectionist policies and trade tariffs continues to hang over global economies like a dark cloud. Canada isn’t immune. According to the CMHC, trade tensions remain a key factor that will weigh heavily on the country’s housing sector throughout 2025. Prices are expected to fall by around 2%, and the hardest-hit provinces unsurprisingly will be Ontario and British Columbia. These are the two most expensive housing markets in the country, and also the most sensitive to shifts in consumer and investor confidence.
But tariffs are only part of the problem.
Canada’s broader economic picture doesn’t inspire much hope either. The CMHC is forecasting a “modest recession” next year, with rising unemployment, slower population growth, and hesitant investors all contributing to a cooling market. For homebuyers and developers alike, 2025 looks like another year of waiting on the sidelines. The “wait-and-see” sentiment is real and dangerous. With fewer transactions, tighter lending conditions, and declining construction starts, the cycle of uncertainty continues.
Affordability, as always, remains a massive concern. While more supply is slowly coming online, especially in the rental sector, demand is weakening. That’s softening the rental markets slightly, but it’s not enough to offset the deepening malaise in homeownership. First-time buyers, in particular, are stuck in limbo unable to afford sky-high prices, yet also wary of jumping in during a period of economic volatility.
There’s a silver lining, though, and it lies just beyond the horizon. The CMHC expects the worst of the trade-related impact to hit in the second half of 2025. By 2026, they predict things will begin to stabilize mortgage rates could ease, trade tensions may thaw, and overall demand is expected to recover slowly. But let’s be clear: this recovery won’t be dramatic. It will be slow, cautious, and uneven across regions.
What Canada needs now is smart policy, economic clarity, and a renewed focus on housing affordability and supply. Until that happens, don’t expect a hot real estate market anytime soon. For most Canadians, 2025 will feel like a holding pattern and 2026 will be the year we finally start to turn the corner.
Let’s just hope it’s not too late.
