Blog > Tariffs and the Calgary Real Estate Market: Understanding the Potential Impact

Tariffs and the Calgary Real Estate Market: Understanding the Potential Impact

by Cameo Palin

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Tariffs and the Calgary Real Estate Market: Understanding the Potential Impact

As a realtor in Calgary, I've been closely following the developments surrounding the proposed U.S. tariffs on Canadian goods. The potential imposition of a 25% tariff, set to take effect on February 1, 2025, has raised significant concerns across various sectors, including real estate. In this blog post, I'll explore how these tariffs might impact the Calgary real estate market.

Economic Uncertainty and Housing Demand

  1. Economic Slowdown: Tariffs can lead to an economic slowdown, which typically results in reduced consumer spending and job uncertainty. This environment can discourage potential homebuyers, leading to decreased housing demand.
  2. Impact on Housing Starts: With economic uncertainty, housing starts may decline. This reduction in new construction projects can further limit housing supply, potentially driving up prices in the long term.

Construction Costs and Affordability

  • Increased Construction Costs: If Canada imposes retaliatory tariffs on U.S. imports, the cost of construction materials like lumber and steel will rise. These increased costs are often passed on to consumers, making homes less affordable for buyers.
  • Affordable Housing Challenges: Higher construction costs can delay or cancel affordable housing projects, exacerbating the existing affordability issues in the market.

Calgary's Housing Market Outlook

Despite these challenges, Calgary's housing market is expected to remain strong in 2025. Here are some key factors influencing this outlook:
  • Sales Projections: The Calgary Real Estate Board (CREB) forecasts over 26,000 home sales in 2025, which is above long-term trends. This suggests a robust demand for housing despite economic uncertainties.
  • Balanced Market Conditions: The market is expected to transition towards more balanced conditions, with price growth moderating to around 3% annually. This balance is partly due to increased supply from new home construction.
  • Population Growth: Although migration levels are expected to ease, population growth will continue to support housing demand. Calgary's population is projected to grow at a rate faster than the provincial average.

Mitigating Factors

  • Economic Diversification: Alberta's economy is diversifying into sectors like alternative energy and technology, which could help mitigate the impact of tariffs on the housing market.
  • Tariff Exemptions: If certain sectors, such as energy, are exempt from tariffs, it could bolster Alberta's economy and support stronger housing activity.

Conclusion

While tariffs pose significant risks to the Canadian economy and real estate market, Calgary's housing sector is expected to remain resilient. The key will be how effectively the local economy can adapt to these challenges and leverage its strengths in diversification and population growth. As we navigate these uncertainties, it's crucial for buyers and sellers to stay informed and flexible in their strategies. Stay tuned for more updates on the Calgary real estate market and how global economic shifts are shaping our local housing landscape.
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