U.S.–Canada Tariffs, Stock Market Volatility, and the Real Estate Forecast in Ontario

In 2025, one of the biggest challenges for Canadian investors and homeowners is navigating the economic uncertainty triggered by U.S.–Canada trade tensions. As tariff battles escalate between the two nations, the stock market has taken a noticeable downturn, and fears about a broader economic slowdown are rising—especially in provinces like Ontario, where manufacturing and cross-border trade are deeply tied to real estate values.

As a professional real estate appraiser in Ontario, specializing in both commercial and residential property valuations, I’ve seen growing concern from clients about what comes next. Are we heading into a real estate correction? How will falling equities and ongoing tariffs affect property values across Ontario?

In this in-depth article, we’ll break down the connection between U.S.–Canada tariffs, the declining stock market, and what this economic shift means for the future of Ontario’s housing and commercial real estate markets.

Table of Contents

1. What’s Happening With U.S.–Canada Tariffs?

2. The Stock Market’s Reaction: A Downward Trend

3. Why Ontario Is Especially Vulnerable

4. Economic Forecasts and Investor Sentiment

5. Real Estate Impacts in Ontario: Sector-by-Sector Analysis

6. What Homeowners and Investors Should Do Now

7. Final Thoughts: Resilience, Strategy, and Smart Appraisals

   
   

1. What’s Happening With U.S.–Canada Tariffs?

Tensions between the United States and Canada have resurfaced over several key trade issues:

• Softwood lumber duties continue to be a sticking point, with the U.S. recently increasing tariffs by 12% in Q1 2025.

• Aluminum and steel imports from Canada are once again under scrutiny as American protectionist policies ramp up.

• Agricultural products are also facing new restrictions, affecting key Canadian exporters in Ontario and Quebec.

  
  

While both countries rely heavily on each other economically, political shifts in the U.S.—especially during election years—often lead to harsher rhetoric and renewed trade barriers. For Canada, this means greater economic unpredictability, which is already making waves in financial markets and real estate.

2. The Stock Market’s Reaction: A Downward Trend

The Toronto Stock Exchange (TSX) and other Canadian equities have been trending downward throughout Q1 and Q2 of 2025. Investor concerns about:

• Reduced export demand

• Supply chain disruptions

• Slowing corporate earnings

• Interest rate instability

  
  

  This has led to a selloff in sectors like industrials, financials, real estate investment trusts (REITs), and consumer goods.

  
  

TSX Performance Snapshot:

• Down approximately 9.5% YTD

• REIT sector has declined over 12%, led by office and industrial REITs

• Construction-related stocks (cement, lumber, infrastructure) are under heavy pressure

While not all downturns spell disaster, this decline has sparked widespread concern among Ontario investors—especially those who hold both stocks and real estate.

3. Why Ontario Is Especially Vulnerable

Ontario is Canada’s economic engine—but it’s also heavily dependent on manufacturing, automotive, tech, and U.S. trade partnerships. When tariffs rise and the U.S. imposes restrictions, Ontario businesses are among the first to feel the pinch.

Key Points:

• Over 80% of Ontario’s exports go to the United States

• The auto manufacturing sector, centered around Windsor, Oshawa, and Hamilton, is particularly exposed

• Ontario’s urban housing markets are highly sensitive to macroeconomic factors like employment, migration, and investor confidence

So, when the stock market dips and trade uncertainty rises, Ontario’s real estate market becomes a focal point for risk and speculation.

4. Economic Forecasts and Investor Sentiment

According to a recent BMO Economics report, Ontario's economic growth for 2025 is forecast to slow from 2.3% to 1.4%, largely due to:

• Weak export numbers

• Softened consumer spending

• Reduced business investment

• Construction slowdowns due to high material costs

  
  

Investor Sentiment Highlights:

• 67% of Ontario-based real estate investors report feeling “cautious” or “bearish” about the next 12 months

• First-time homebuyers are hesitating, anticipating a price correction

• Institutional investors are shifting toward multi-residential and logistics assets as safer bets

  
  

Real estate has long been a safe haven during stock market turbulence, but that doesn’t mean all segments are created equal.

5. Real Estate Impacts in Ontario: Sector-by-Sector Analysis

Here’s a breakdown of how different real estate sectors in Ontario are being affected by U.S. tariffs and the accompanying market volatility.

A. Residential Real Estate

Current Trends:

• Slower sales volumes in cities like Toronto, Hamilton, and Kitchener

• Rising days on market

• Plateauing or slight decline in average home prices in the GTA

Tariff-Linked Factors:

• Construction costs remain high, deterring new builds

• Buyer confidence is shaken due to broader economic fear

• Some buyers are delaying purchases in hopes of future price drops

Appraiser’s Insight:

I’ve seen more appraisal requests for refinancing, as owners look to leverage equity amid uncertainty. Banks are tightening lending criteria, which makes accurate valuations even more important.

B. Commercial Real Estate

Current Trends:

• Industrial and warehouse space is experiencing mixed demand

• Office vacancies remain elevated, especially outside Toronto’s core

• Retail is facing challenges in suburban and rural Ontario

Tariff-Linked Factors:

• Manufacturing tenants are downsizing or pausing expansion

• Import-dependent businesses are shifting operational models

• U.S.-linked logistics companies are reconsidering Canadian investments

Appraiser’s Insight:

Commercial appraisals now require deeper income analysis and forecasting, especially for industrial or mixed-use properties. CAP rates are rising, and lenders are more risk-averse.

C. Multi-Family Housing

Current Trends:

• Strong rental demand persists, especially in Ottawa and Toronto

• Vacancy rates remain low

• Purpose-built rental development is still active

Tariff-Linked Factors:

• Investors are flocking to multi-family assets for income stability

• Construction delays due to material costs remain a risk

Appraiser’s Insight:

This sector is the most resilient so far. However, rising interest rates and construction inflation are limiting upside. Appraisals for multi-unit dwellings must account for rental income volatility in softening job markets.

6. What Homeowners and Investors Should Do Now

In periods of uncertainty, information and preparation are your strongest tools. Whether you own property, are looking to buy, or manage a portfolio, here are key strategies to protect your real estate position:

1. Get a Current Market Appraisal

A professionally prepared appraisal will give you a clear picture of your property’s true market value—based on recent comparables, income potential, and current economic risk.

2. Review Financing Options

With interest rates fluctuating and lender criteria tightening, now is the time to review mortgages, lines of credit, and potential refinancing.

• Know your loan-to-value ratio (LTV)

• Understand what your property is worth before applying

• Use appraisals to negotiate better terms or assess investment risk

3. Monitor Tariff News and Economic Indicators

Follow developments in trade policy and U.S.–Canada relations. Watch for updates on:

• New tariff announcements

• Bank of Canada interest rate changes

• TSX and S&P/TSX REIT Index performance

• Government stimulus or support programs

4. Diversify Investment Exposure

Consider spreading investment risk across:

• Geographic regions (e.g., outside major metro areas)

• Property types (residential vs. commercial)

• Asset classes (real estate, equities, fixed income)

7. Final Thoughts: Resilience, Strategy, and Smart Appraisals

While stock markets may remain volatile and U.S. tariffs create headwinds, Ontario’s real estate market has shown resilience time and again. The key to thriving in uncertain times lies in sound strategy, due diligence, and local expertise.

As a real estate appraiser serving clients across Ontario, I provide accurate, timely, and independent property valuations to help homeowners, investors, and lenders make smarter decisions in every market condition.

Need a Property Appraisal in Ontario?

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• Compliant with lender requirements

• Backed by market analytics

• Customized to your unique property type

Get in touch today to request your residential or commercial appraisal—and take the uncertainty out of your next move.