Will Tariffs push real estate prices higher?

With all the talk lately of the U.S. and Canadian Tariff wars, we thought it would be a good time to relate that back to our favourite topic, real estate.

The biggest question we have been asked this month is will the Tariffs affect my real estate prices?

The simple answer is NO.  The complex answer is SORT OF.  Directly speaking, the U.S. is taxing goods that cross the borders.  Real estate, the last time I checked, doesn’t generally move across borders.  It is possible to move a house on wheels, but generally speaking, what we are talking about, Tariffs will not directly affect you.

What is the indirect way Tariffs affect real estate.  Canada has many amazing features, but one of our best is our resources.  We have a whole country full of them, and great ones.  When it comes to real estate, lumber is king.  Canada has some of the best softwood lumber on the planet, ideal for all types of construction.  We are mainly an exporter of it, since our economy doesn’t need nearly as much as we produce.  Here the rub, the U.S. wants to strap higher tariffs on a lot of the real estate components, ie, softwood lumber, drywall, steel, etc., etc.  I think you get the point.

The fight between the U.S. and Canada can be potentially costly to you in the future if you are considering buying a pre-construction home.  The builder/developers are the most susceptible to the Tariffs, as they see them directly in their bottom line.  And the last time I checked, every builder passes all the costs onto the new purchasers.  I have yet to see a builder take a tax increase on the chin for the good of their purchasers.

That being said, Tariffs aren’t great, Canada has had a long standing relationship with the U.S. and it has worked out well for both parties.  Starting to tax imports and exports will eventually lead to increases in the cost of homes.  It generally won’t affect already built real estate.  So be aware next time you are thinking of buying pre-construction.  More and more we are seeing the benefits of resale investing.

Hope this helps, if you need more clarity on this topic or you want to reach out to us to discuss you buying a home or condo, feel free to contact us at 416-913-1089 or email info@youngrealty.ca

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