After showing early signs of recovery, British Columbia’s housing market has taken an unexpected turn in 2025, largely due to rising global economic uncertainty. Hopes for a stable rebound were derailed by an escalating trade war that’s shaking confidence among buyers and investors alike.
Home sales in BC had been climbing steadily since October 2024, reaching a promising pace in January of this year. However, concerns over potential tariffs on Canadian exports to the United States have caused many would-be buyers to retreat, stalling momentum in the market. By the end of Q1, residential sales across the province were tracking at an annualized pace of just 68,000 units—roughly 20% below the long-term average.
What’s particularly striking is that this slowdown is happening despite a significantly improved interest rate environment. Over the past year, the Bank of Canada has aggressively reduced its overnight lending rate from 5% to 2.75%, helping drive average five-year fixed mortgage rates below 4.5%—a notable drop from over 6% at the close of 2023.
Initially, these rate cuts were beginning to lift buyer activity. But the economic uncertainty triggered by the trade conflict—especially one involving BC’s top trading partners, the US and China—has cast a shadow over the market. Concerns about inflationary pressures from the trade war have made further rate cuts less likely, and a surge in US bond yields is creating upward pressure on Canadian mortgage rates.
While BC’s economy is somewhat more diversified than other provinces, it’s not immune to the global slowdown. Tariffs imposed on other key trade partners are expected to reduce international demand for BC exports, creating ripple effects across multiple sectors. In a worst-case scenario, provincial economic growth could slow to a standstill—or worse, dip into recession.
For homebuyers and sellers, the takeaway is clear: expect volatility. While lower interest rates may offer some opportunities, market conditions remain fragile. Those considering entering the market should keep a close eye on economic developments and consult with experienced real estate professionals to navigate this uncertain landscape.
