Tariffs could hit homebuyer optimism, warns Butler

Mortgage expert says tariffs and job losses may hurt buyer confidence just as interest rate cuts fuel optimism

Tariffs could hit homebuyer optimism, warns Butler

Recent optimism in Canada’s housing market, spurred by anticipated interest rate cuts, could be short-lived if the country is dragged into a trade war with the United States, warns one mortgage expert.

Ron Butler, a broker with Butler Mortgage, said that potential US tariffs and retaliatory Canadian measures could significantly impact consumer confidence, particularly among homebuyers.

“Bad economic news is bad for housing,” Butler told the Financial Post. “People are always going to be cautious about buying a house if they think their jobs could be in jeopardy.”

Tariff threats

US President Donald Trump has threatened to impose a 25% tariff on all imports from Canada and Mexico by February 1 if both countries fail to tighten border security. In response, Canada has vowed to introduce countermeasures, raising concerns about a broader economic fallout.

According to Butler, the uncertainty surrounding these tariffs could deter homebuyers, particularly those considering variable-rate mortgages.

“We just don’t know what the outcome of these tariffs could be,” he said. “It could be terrible. It could be just not great.”

Even without a trade war, a shortage of available homes in key markets is already constraining housing activity. Butler pointed to Ontario and British Columbia, where sluggish construction has left buyers with fewer options, intensifying affordability challenges.

“Virtually, there’s nothing to buy,” he said, emphasizing that the lack of inventory is keeping competition high and preventing price relief for prospective buyers.

Read next: Recent rate cuts drive shift to variable-rate mortgages

The outlook for condominiums, particularly in Southern Ontario, is also showing signs of weakness. Butler pointed out that many units purchased five or six years ago are now reaching completion, but they are priced at levels that buyers may no longer be willing – or able – to afford.

“It’s just going to get worse. It’s very clear that it gets a little bit worse every day,” Butler said.

Parallels with US housing slowdown

The uncertainty surrounding interest rates and economic conditions isn’t just a Canadian issue. South of the border, rising borrowing costs have already taken a toll on the US housing market, causing a slump in new home sales.

“Their new home sales have kind of collapsed in the same way that parts of Canada have collapsed,” he said.

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