Home Prices Already Falling in Some of Canada’s Most Tariff-Sensitive Markets

Home prices in several Canadian cities with export-reliant economies declined or flattened in May, suggests new analysis from Wahi, a Canadian real estate listing website.

By Josh Sherman | 4 minute read

Wahi compared home prices across the 19 cities considered most vulnerable to U.S. tariffs. 

To gauge the potential early effects that tariffs may be having on home prices, Wahi analyzed the latest RPS-Wahi House Price Index data for the 19 markets that the Canadian Chamber of Commerce recently flagged as being most vulnerable to the Trump administration’s trade policy.

Wahi’s analysis found that as of May, home prices were already declining or flat on a year-over-year basis in seven of the 19 markets with above-average economic exposure to tariffs. 

This stands in contrast to the broader price performance in Canada’s largest cities, which tend to have more diversified economies. Just three of the biggest 13 urban areas tracked by the RPS-Wahi House Price Index were down in May relative to the same time a year ago.

“A buyer’s ability to afford a home is typically linked to their income, so if local economies suffer job losses because of the tariffs, we expect to see less demand for real estate and other big ticket items in these markets,” says RPS-Wahi President and CEO Benjy Katchen. “In some cases, the threat or uncertainty of rising unemployment could be enough to chill a local market,” he adds.

Of the 19 markets facing heightened tariff-related risks, Hamilton, a major exporter of steel, posted the sharpest year-over-year decline in May at about 3%. The city is ranked 8th overall in terms of tariff risks, according to the Canadian Chamber of Commerce.

Hamilton was also one of the three major Canadian markets where prices fell in May. Downturns in the other two (Toronto and Vancouver) are primarily driven by weakness in the condo segment.

St. Catharines-Niagara, the 16th most exposed market to tariffs, trailed Hamilton as prices fell approximately 2% year-over-year. Meanwhile, Kitchener-Cambridge-Waterloo, as well as Oshawa and Belleville, each experienced price declines of about 1%. Prices were flat in Barrie and Abbotsford-Mission. 

The Canadian Chamber of Commerce’s Business Data Lab created the U.S. Tariff Exposure Index to estimate the economic risks facing 41 of Canada’s biggest metro areas.

It is based on two measures: U.S. export intensity and U.S. export dependence. The former looks at exports as a share of local GDP, while the latter takes into account what share of exports are bound for the U.S. “The top cities that are on this list are involved in oil exports as well as automobile and auto parts manufacturing,” explains Andrew DiCapua, the chamber’s principal economist.

The 19 cities with elevated, or positive, U.S. Tariff Exposure Index readings are those that are more disproportionately exposed to tariff risks than the national average for both measures. “So much of our trade across the country is intricately tied with our supply chains and our commercial relationship with the U.S., so it’s not surprising to see relatively high levels of exposure in so many places,” Pascal Chan, vice president of strategic policy and supply chains at the Canadian Chamber of Commerce. 

Cities with negative readings may still feel the brunt of tariffs but less so than others, notes DiCapua.

There are a variety of reasons some cities face lower tariff-related risks. “It could be in the types of products that they’re manufacturing,” says DiCapua, adding certain markets may export more to Europe or Asia than the U.S. “Or it could be that their economy is more buffered by, let’s say, tourism or services-based industries,” he continues. “You can think of Toronto or Vancouver as being a little bit more insulated.”

Because the Tariff Exposure Index was calculated in February, it’s possible that some markets are more exposed today, such as Hamilton, given the Trump administration slapped new tariffs on steel in March.

Tariffs may be having a psychological influence on homebuyer decisions in markets that are more reliant on exports to the U.S. even if serious concrete effects, such as mass layoffs, have yet to materialize, market-watchers suggest. “We are at peak uncertainty right now,” Benjamin Tal, deputy chief economist of CIBC, tells Wahi. “If you’re worried about your job… you’re not buying anything,” he continues.

Tal is optimistic that Trump will backtrack on some tariffs. However, he suspects some are here to stay, and for markets sensitive to these he anticipates further declines. “Some of those cities impacted all over the country will see larger deteriorations in house prices,” he adds.

DiCapua agrees that the threat of job losses alone is enough to chill a market. “It could just be that there’s maybe more fear and uncertainty that is permeating a local market, so people don’t want to make a big [financial] decision if they feel like things may be hitting closer to home,” he says.

Other developments could be influencing cooling prices, DiCapua says. For instance, lower immigration levels may result in reduced housing demand. 

About the RPS-Wahi House Price Index (HPI)

The RPS-Wahi Home Price Index is the most comprehensive source for house price data in Canada and includes the median house price dollar values and extensive additional data by property type from a national to the local level. For more information, the complete methodology is available.

Long-Term Price Trends

The RPS-Wahi House Price Index is based on the latest monthly actual home values in 1,000 towns and cities across the country.

The index shows how property values have changed over time, relative to a base period (Jan. 2005 = 100). An HPI value of 300 means property values have tripled (on a smoothed, adjusted basis) since 2005.

The HPI does not indicate the actual price of a property. It demonstrates how prices have moved relative to the base period. 

Market Momentum

A rising index indicates an upward price trend. A falling index suggests price softening or correction. Since the HPI smooths noise and filters out outliers, it gives a more stable, reliable picture of pricing trends than monthly medians.

The HPI is based on an up-to-six-month rolling average, so it does not reflect short-term volatility, such as one-off surges in prices from luxury sales. All figures are rounded to the nearest whole number.