Trade War Threatens Canadian Housing Market Recovery

A prolonged trade war between the US and Canada could negatively impact the Canadian housing market's recovery, according to Sal Guatieri, director and senior economist at BMO Capital Markets. The escalating tensions have already caused a pause in homebuyer confidence.

Guatieri believes that the cross-border dispute will weigh more on the Canadian housing market than the ongoing Iran conflict. He notes that higher oil prices and gasoline prices can drain spending power, but their impact is less significant on the housing market compared to trade tensions.

The Bank of Canada has decided to hold interest rates steady at 2.25%, which means there's no change for Canadian homebuyers and owners with variable-rate mortgages. Guatieri expects that the housing market could remain fragile until there's clarity and de-escalation of trade tensions.