Climbing mortgage rates could push some buyers to the sideline, but the new trade dispute is barely featuring in client conversations
The eruption of a cross-border trade war last week hasn’t given many potential homebuyers pause for thought in Rochester, with the economic impact of the US-Canada spat unlikely to push many to the sidelines.
But the ripple effects are still being felt – not least for mortgage rates, with inflation fears around tariffs and oil price spikes (the latter caused by the ongoing war in Iran) nudging the 30-year fixed average closer to 7% this week.
Mark Siwiec, a licensed real estate broker and owner with Elysian Homes near the US-Canada border in Rochester, said the knock-on effect of the trade war on interest rates seemed a bigger threat to the housing market than a possible economic contraction.
“The real issue is tariffs feeding inflation, inflation affecting the bond market, and the bond market causing mortgage rates to go higher,” he told Mortgage Professional America. “That seems to me to be the real issue.”
But while it’s close to the border, Canadians aren’t a significant contributor to Rochester’s housing market – meaning there’s little chance of the tariff dispute seeing an exodus of buyers from the region.
The city frequently ranks among the hottest housing markets in the country, and Canadian buyers aren’t a meaningful contributor to Rochester’s market in the way they might be in border cities like Detroit and Buffalo.
“Canadian buyers aren’t really driving Rochester real estate,” Siwiec said. “We have far more buyers than we do sellers, and that imbalance is homegrown.”
A direct, but limited, impact
Rochester’s economic ties to Canada, though, are more significant than its property market ties. The city exported $4.3 billion in goods in 2024, with Canadian among its largest export markets. Major manufacturers all maintain trade relationships that cross the border.
And on the construction side, the tariff impact could also be felt. Approximately 85% of US softwood lumber imports come from Canada, according to the National Association of Home Builders (NAHB), and the new tariffs mean higher price tags on kitchen remodels, bathroom upgrades and new construction.
But the tariffs will likely pose less of a threat to costs in the resale housing market. “In Rochester, we’re more likely to feel the trade war in the price of a kitchen renovation or a bathroom renovation or a new house than in the actual resale value of the house that somebody’s already living in,” Siwiec said.
Some buyers ‘step aside’ as rates climb
The trade war is barely registering at all in client conversations, with mortgage rates still dominating the discussion. At the beginning of the year, rates were hovering around the low sixes – but have since climbed to 6.71%, according to Freddie Mac, and that jump has had a tangible effect in convincing buyers not to make their move.
“We’ve seen buyers step aside,” Siwiec said. “We’ve seen buyers who are now on the sidelines waiting for greater geopolitical stability, greater economic stability.”
He suggested that Americans had become accustomed to rates in the sixes after the initial shock of their spike from the threes – but said they’re less comfortable with a further tilt higher. “Over the course of the past year, people have grown used to 6.25%, 6.5%,” he said. “But as it’s pushing 6.8%, or perhaps 7%, that is a barrier.”
Rochester, though, is showing no signs of a market in distress. The city’s construction restraint has kept inventory tight and demand competitive – and it could take years before meaningful supply relief arrives.
Home prices have continued soaring in recent years thanks in part to that scarcity of homes. Siwiec said price appreciation will likely continue – but doesn’t expect the same strength of growth in the coming years.
“I know we’re starting to see 3%, 3.5%, 4% [annual growth],” he said. “It’s still in the positive – we’re not losing value – but those 8%, 10%, 12% increases have to at some point come to an end.”
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