How Tariffs and Interest Rates Are Shaping Toronto’s Real Estate Market

Global economic shifts don’t happen in a vacuum—especially not when it comes to Toronto’s real estate market. The recent imposition of U.S. tariffs on Canadian goods, paired with a drop in interest rates by the Bank of Canada, is creating new considerations for buyers, sellers, and investors across the city.

Whether you're eyeing a new home in Etobicoke, a luxury condos in Yorkville, or a family home in Forest Hill, understanding how these changes impact pricing and affordability is key to navigating what’s next.

Rising Construction Costs: The Tariff Effect

The United States has implemented a 25% tariff on Canadian imports, including critical construction materials such as steel and lumber. For Toronto, where new developments are a cornerstone of the market, this has immediate implications.

From high-rise towers in the downtown core to custom homes in Forest Hill, increased material costs could drive up new home prices across the board. Buyers looking at pre-construction opportunities or planning major renovations should be aware of potential delays and inflated budgets as builders adjust to these rising expenses.

Interest Rates Are Down—But So Is Certainty

In response to growing economic uncertainty, the Bank of Canada has lowered its benchmark interest rate to 3%. For borrowers, this can present a short-term win—lower rates typically mean lower monthly payments and increased borrowing power.

However, this drop is also a sign of broader economic unease. Market conditions may continue to fluctuate, and future rate increases could quickly affect mortgage affordability. In high-demand neighbourhoods like Yorkville or Midtown, even a slight shift in rates can significantly influence pricing and demand.

What Buyers and Sellers in Toronto Should Know Right Now

Toronto’s real estate market remains resilient, but staying informed is more critical than ever. Whether you're entering the market for the first time or rethinking your real estate strategy, here’s how to stay ahead:

• Track Market Changes
  Stay updated on tariffs, rate decisions, and economic forecasts. These factors directly influence home values, mortgage terms, and the cost of construction.

• Re-Evaluate Affordability
  With material costs rising and borrowing conditions shifting, revisit your budget with up-to-date numbers. Pre-approval with a trusted lender can provide clarity.

• Lean on Local Expertise
  Working with experienced realtors who understand Toronto’s neighbourhood dynamics—like the team at Gerardi Real Estate—can help you make confident, informed decisions.

Toronto’s real estate market is evolving—but opportunity still exists for those who are prepared. Whether you’re buying a luxury condo in Yorkville, investing in Etobicoke, or selling in Forest Hill, we’re here to guide you every step of the way.

Have questions about what these economic shifts mean for your next move?
Contact Valerie or Michael Gerardi for expert insight and tailored real estate advice.