Economist warns buyer fears could slow market despite strong fundamentals
Economist warns buyer fears could slow market despite strong fundamentals
Despite a 30-day reprieve, U.S. tariffs are casting a cloud over Vancouver real estate, although healthy growth in the sector may still be possible in 2025 if the economic stars align.
While the tariffs threatened by U.S. President Donald Trump have been delayed and may not necessarily materialize, they represent a “sword of Damocles” hanging over regional real estate, said Ryan Berlin, vice-president of intelligence with Rennie & Associates Realty Ltd.
“In our world since COVID, even until this past week when the sword of Damocles in the form of tariffs was dangled above us, volatility and instability in our macroeconomy [and] housing market … have led to a feeling of a lack of certainty, a lack of confidence,” said the head economist at the Vancouver-based real estate services company.
Although developers, buyers and investors generally shy away from making big investments amid uncertainty, Berlin said many elements exist for a robust market in 2025. These include pent-up demand, higher household incomes and tempered home prices below their May 2022 peak.
“What we do see, tariffs notwithstanding, is a stabilization in our macroeconomy, and in inflation and in the approach to managing the economy taken by the central bank,” he said.
Others are not quite as confident in the housing market’s ability to absorb U.S. tariffs.
Victor Tran, Toronto-based mortgage and real estate expert with online marketplace Ratesdotca Group Ltd., said the Bank of Canada still has more ammunition, but lower borrowing costs might not be enough to overcome buyer anxiety.
“I think there is a lot of fear in people who have been standing on the sidelines waiting to purchase, due to the instability,” he said.
“Buyer psychology is changing rapidly based on what’s been presented by politicians, and even if there’s lower rates … there’s just too much political instability. I don’t think buyers will feel as confident in making one of the biggest purchases of their lives when there’s so much uncertainty from regulators and politicians.”
While Canada does not export homes, Tran said B.C.’s housing market could be upended by tariffs if they result in recession, unemployment or widespread defaults on payments and loans.
“I think it’s safe to say that [a recession] is likely to happen if tariffs are implemented,” he said. “I think the unemployment rate will increase, and ultimately that will impact the housing market.”
Despite the continuing possibility of tariffs, Rennie is projecting higher sales activity for this year, as elevated inventory entices buyers from the sidelines.
The company’s intelligence unit forecasts 49,623 MLS sales in the Vancouver region in 2025 compared with 40,173 in 2024 – an increase of 24 per cent.
Rennie also said it expects price growth of 4.4 per cent for condos and 6.4 per cent for detached homes, according to the company’s Jan. 31 outlook.
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