A potential tariff war with the United States looms on the horizon, and its ripple effects could significantly alter Canada’s housing landscape. These changes may have distinct consequences for tenants, homeowners, and landlords, each experiencing shifts in market conditions. As the situation evolves, one thing is clear: the economic uncertainty surrounding tariffs could have a variety of impacts on the housing sector.
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Economic Uncertainty and Housing Market Sentiment
For homebuyers, the introduction of tariffs could be a game-changer. Economic instability often leads to increased caution, with prospective buyers potentially delaying large investments. This reticence may cool Canada’s already sluggish housing market even further, especially if people become more hesitant to assume substantial debt. In this environment, potential buyers may think twice about purchasing homes, leading to a decrease in demand and price adjustments.
Rent Trends: A Declining Market for Tenants
Despite the mounting tariff threat, renters are experiencing a slightly different reality. According to a report by Rentals.ca, rental prices across Canada have dropped by nearly $100, marking a 4.4% decline from the previous year. The average asking rent for all residential properties in Canada stood at $2,100 in January 2025, reaching an 18-month low.
Cities like Vancouver and Toronto, notorious for their high rental prices, saw significant drops as well, with rents falling by 5% and 8%, respectively. But despite these price reductions, the looming economic uncertainty tied to tariff discussions has left many wondering if affordability in the rental market could worsen in the coming months.
What Tenants Can Expect: Impact of Tariffs on Rentals
Experts agree that tariffs could indirectly influence Canada’s rental market. Lisa Hannam, editor-in-chief at MoneySense, explains that tariffs could result in economic shifts that affect job security and the overall rental supply. As a consequence, rents could either rise or fall depending on the broader economic situation.
Mike Heddle, a broker with Royal LePage State Realty, highlights that lower consumer confidence, exacerbated by inflation, has already led to lower tenant demand. “We’ve seen a drop in consumer confidence over the past few months, and the looming threat of tariffs only adds more uncertainty,” he states.
Even so, tenants must remain vigilant, especially with upcoming rent increases. In 2025, Ontario has capped rent hikes at 2.5%, while British Columbia’s rent cap is set at 3%. Victor Tran, mortgage and real estate expert at Ratesdotca, warns tenants to be prepared for rent increases as landlords often pass down their rising expenses, such as property taxes, insurance premiums, and maintenance costs.
Is Now a Good Time to Shop for a New Rental?
With rents declining in certain sectors, tenants may wonder if now is the best time to move. According to Heddle, this is actually a favorable period for those searching for a new rental. “The market is softer right now,” he says. “First-time tenants, such as those leaving university or their parents’ homes, may find a good selection of available rental units.”
However, Heddle also cautions that the largest declines in rent have been seen in high-end properties, with monthly rent prices above $3,000. “Entry-level properties are still seeing rent increases,” he notes, so tenants seeking more affordable options should keep this in mind.
Though the tariff situation remains uncertain, Hannam points out that most people move due to personal circumstances rather than economic factors. Job changes, family matters, and lifestyle preferences often outweigh the potential impacts of a tariff war. Moving, she adds, is costly, not just in terms of rent but also with associated costs like movers and utility setup.
Similarly, Tran advises caution, reminding renters that the future of the housing market remains unclear. “No one can predict whether tariffs will be implemented or their ultimate impact,” he says.
Canada’s Rental Prices Hit 18-Month Low – Will the Downward Trend Continue?
Why Are Some Mortgage Rates Rising Even As Canada’s Lending Rate Falls?
Toronto Housing Market Forecast 2025: Trends, Insights, and Predictions
Canadian Mortgage and Real Estate Market Forecast for 2025
Secondary Suite Forgivable Loan Program 2025: A Boost for Housing Solutions
Navigating Landlord-Tenant Relations in Uncertain Times
For tenants hoping to negotiate lower rents, now might be the time to make a move. If you’re a reliable tenant, maintaining a clean property and paying rent on time, you may be able to work out a deal with your landlord. Hannam suggests that tenants in this position might have leverage to negotiate favorable rental terms.
However, the willingness of landlords to negotiate varies based on experience. Heddle explains that novice landlords may be more open to negotiating rent, while more seasoned property owners may be inclined to ride out the market downturn. Regardless of the situation, he emphasizes that tenants should be aware of local rent laws and regulations before pursuing rent renegotiations.
Preparing for the Uncertainty Ahead
As Canada braces for the possible impact of a tariff war with the U.S., its housing market will likely face distinct challenges for both tenants and property owners. While potential homeowners may hold off on purchasing, tenants could find themselves navigating an unpredictable rental market with rent prices potentially rising or falling depending on broader economic shifts. Both renters and landlords must stay informed, be proactive in negotiations, and remain adaptable as this uncertain economic landscape unfolds.
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