The Greater Toronto Area (GTA) is a bustling place with a lot of people looking to buy homes. Many are professionals currently renting, families hoping to upsize, and baby boomers wanting to move into condos. But something big is happening that could make buying a first home trickier: tariffs on building materials.
The Problem:
Tariffs Make Everything Costly The GTA, including Oakville and Etobicoke, is facing a “triple challenge.” Affordable homes are harder to find, housing supply isn’t keeping up with demand, and traffic can make even getting around a pain. Now, the cost of building materials like lumber, steel, and aluminum is about to go up 25% because of tariffs. This increase is like a big speed bump for folks trying to buy homes or condos for the first time. Builders might have to charge more to cover these costs, meaning higher prices for buyers.
Prices in the GTA are already pretty high.
Imagine trying to buy your first home when prices might skyrocket because of tariffs! They could add as much as $50,000 to the cost of building a typical house or condo.
These tariffs are coming at the same time other things are changing. The Bank of Canada cut the key interest rate to 3%, and there is talk about cutting rates even more. The Toronto Regional Real Estate Board (TRREB) predicts that by 2025, buying might be easier with lower interest rates, but tariffs add a lot of uncertainty.
Agitation:
Why Tariffs Could Delay Your Home Buying Plans So what does this mean for the average person wanting to buy a home in the GTA? People who are renting right now face a lot of questions. Is it better to buy now, before prices go up more, or wait and hope prices stabilize?
With housing prices averaging about $1,084,547 this year, even a small increase is a lot of money. Add higher building costs due to tariffs, and the house you were saving for might feel like it’s moving out of reach.
Interest rates are something to watch as well. If they rise because the economy is unstable, monthly mortgage bills could climb higher. For someone just starting out or trying to move up, this could make buying a home harder. Developers might also slow down building condos and homes due to the high costs, which means fewer choices for buyers.
People planning to sell larger homes and downsize to condos are affected too. With building costs up, new condos might be more expensive or take longer to finish. This impacts baby boomers and empty nesters who want less space but comfortable living.
What Can You Do?
How will tariffs on building materials make buying a first home or condo trickier?
If tariffs worry you, there are some things you can consider as you think about buying:
Act Now if You Can: With interest rates potentially going down more, and prices expected to rise, acting sooner might save you headaches later. If you find a good deal and can buy now, it might be worth it before tariffs hit harder.
Look at New Areas: Expanding your search to include neighborhoods with more available listings or less competition might open doors you didn’t see before.
Keep an Eye on Policy Changes: Political changes could mean new policies on housing and trade. Stay informed on any potential property tax changes or any measures to counteract these tariffs.
Work with Experts: Real estate professionals can help you understand current market conditions and guide you in making smart decisions. They know the local market and can offer advice tailored to your needs.
What if Tariffs Continue?
The big question is: what if tariffs stay around or get worse? Prices of materials might keep climbing, making new builds skyrocket. The once-predicted ease of buying a first home in 2025 might not happen if tariffs push prices even higher. Scarcity could also cause rents to rise, making renting less affordable as well.
But if more homes and condos become available, the market might balance out somewhat. People waiting to buy might find themselves with more options and slightly less competition.
The Greater Toronto Area has always been popular due to its strong job market and diverse opportunities. As long as it remains a desirable place to live and work, people will continue to look for homes here.
What's Next?
The GTA real estate market is influenced by more than just tariffs.
It’s a mix of supply and demand, interest rates, and economic changes. Whether you’re renting and saving, planning to upsize, or thinking of downsizing, these shifts impact your plans.
One thing is clear for potential buyers: staying informed and flexible is key. The real estate landscape might be tricky to navigate, but understanding market dynamics can help guide you to make the best decision. Working with someone who knows the market can offer advantages and make the process more manageable.
Whether you’re thinking about buying now or waiting for the right moment, staying proactive and understanding market changes will empower you to find the home you want in the GTA despite the challenges tariffs may bring.