While fears that U.S. tariffs could restrain housing sales in Canada, affordability coupled with demand is expected to keep Edmonton’s real-estate market hot.
The market for homes is very strong despite the threat of tariffs that would increase the costs of construction materials and potentially lead to job losses, says the head of the Realtors Association of Edmonton’s board.
“Right now, we’re seeing multiple offers (on homes),” Darlene Reid, the association’s chair, told CTV News Edmonton on Sunday. “Even (Sunday) morning, some (realtors) were talking to me, and there are multiple offers on almost every listing. Inventory is so low, and there are still people that need housing. People haven’t even mentioned the (possibility of) tariffs.”
Affordability is attracting potential owners to target Edmonton, says the head economist of Alberta’s largest financial institution.
Mark Parsons, the chief economist for ATB Financial, told CTV News Edmonton on Friday, that there’s been a “bit of a shift to Edmonton” because of its cheaper housing prices.
“We see Canadians, in general, chasing affordability, and that same trend is playing out here in Alberta,” he said.
“We see the more affordable markets in Alberta being a little bit more resilient in the province, and that’s the trend that we’ve seen over the last few months.
But along with demand driving up prices, rising building costs because of tariffs will boost them, Reid said.
“We’re expecting some supply shortages, which could cause some delays in the construction, which, of course, increases costs,” she said, adding home builders expect the higher construction costs to raise home prices by three to six per cent for an average increase of about $7,500 to $10,000.
“Then, as these projects are being delayed in startups of new home construction, it’s going to cause an even bigger demand on our already-low inventory.”
That real-estate prognosis runs counter to that described by the Canadian Home Builders' Association, which said last week the U.S. tariffs would have a “muted” impact on the industry on their own but that an expected slowdown in the economy tied to tariff impacts could hold the national housing market back, dragging down housing starts.
“We still have a bit of a slow market despite the fact that interest rates are coming down, and we would expect that’ll continue to worsen as the trade war continues, if it does,” Kevin Lee, the chief executive officer of the Canadian Home Builders' Association, said on Tuesday, the day the U.S. tariffs began before they came off a day later.
Canada has responded to U.S. President Donald Trump’s trade salvos with retaliatory tariffs targeting $30 billion worth of U.S. goods. Lee said that if these retaliatory tariffs hit critical construction materials from the U.S., they could drive up costs for builders.
Parsons says the duration of the U.S.-Canada trade war is a chief factor in how it will affect the housing economy.
“If we have a prolonged trade war, we could see some job losses, and (that would) put some downward pressure on housing,” he said.
“At the same time, we see the Bank of Canada cutting interest rates even more aggressively, which will cushion the blow and make housing a little bit more affordable.”
Canadian counter-tariffs on U.S. goods do pose a risk because they will raise home building costs, Parsons said, “and that will feed through to the home buyers.”
And the unpredictability of the situation is eroding consumer confidence, he said, leading businesses to proceed cautiously.
“They’re going to be waiting for more certainty as to when this is going to end so they can make some major investment decisions,” he said.
With files from CTV News Edmonton’s Brandon Lynch and Miriam Valdes-Carletti, and The Canadian Press
