The Trade War Is Crushing Real Estate

There has been a tremendous amount of discussion over the past year and a half about tariffs, trade wars, politics and the effect all of this uncertainty is having on the Canadian economy.I'm not particularly interested in turning this into a political discussion.What I am interested in is what has actually happened to our local real estate market during the same period.When we look at the Fraser Valley numbers, there is a pretty striking change that begins around the same time tariff uncertainty really entered the conversation in early 2025.That doesn't mean tariffs are solely responsible for what's happened to real estate prices. They aren't.But I also don't think we can pretend that geopolitical and economic uncertainty has had no effect on buyer confidence or our housing market.

The Fraser Valley Market Had Actually Stabilized

To understand what's happened, we need to go back a few years.Fraser Valley real estate peaked during the extraordinary COVID-era market in March 2022. Extremely low interest rates, enormous buyer demand and limited inventory pushed prices to levels we had never seen before.When interest rates began rising, prices fell quickly.But something interesting happened after that initial correction.The market began to stabilize.During 2023 and 2024, we generally saw seasonal rebounds followed by softer periods. Prices moved around, but the overall Fraser Valley market remained relatively flat compared with the dramatic swings of 2021 and 2022.Early 2025 initially looked like it might follow a similar pattern.Then things changed.

What Happened in the Spring of 2025?

Around March and April 2025, tariff discussions with the United States became a major economic story.Financial markets became extremely volatile, businesses faced new uncertainty and consumers were suddenly trying to understand what a potential trade war could mean for the Canadian economy.At almost exactly the same time, the seasonal rebound we had been seeing in Fraser Valley real estate disappeared.The Home Price Index began moving down.And it hasn't recovered.In April 2025, benchmark pricing in the Fraser Valley was approximately $1.5 million based on the market segment I was examining.Today, that number is approximately $1.319 million.That's a decline approaching $200,000.

Tariffs Aren't the Only Reason

I want to be very clear about this because correlation doesn't automatically mean causation.There are plenty of other reasons Fraser Valley real estate has struggled.Affordability was already stretched. Interest rates had increased dramatically from their pandemic lows. Canada's economy had its own challenges. Household budgets were under pressure, and home prices had arguably reached unsustainable levels during the previous boom.All of those things matter.But real estate markets are also heavily influenced by confidence.Buying a home is one of the largest financial decisions most people will ever make. If buyers are worried about their jobs, the economy, trade relationships or what might happen next, many simply decide to wait.That reduction in demand matters.

Fraser Valley Sales Remain Extremely Low

Sales activity continues to be one of the biggest challenges facing our market.We're currently seeing sales at levels that appear to be around a 26-year low.That's especially significant when you consider how much the Fraser Valley has grown during that period.There are far more homes and substantially more people living here than there were 26 years ago, yet transaction volumes remain extraordinarily low.And without enough buyers absorbing the homes available for sale, it becomes difficult for prices to stabilize.

Inventory Isn't Necessarily the Problem

One of the more interesting parts of today's market is that inventory itself isn't exploding.New listings grew through 2023, 2024 and 2025, but this year we haven't seen the same increase.Months of inventory has also remained below the levels we reached last year. At this point last year, the Fraser Valley was approaching 11 months of supply. This year, we haven't reached 10 months.Days on market also haven't climbed as high as they previously did.Those could eventually become encouraging signs.But they haven't been enough to stop prices from declining.That's important because it tells us this isn't simply a story about too many people suddenly deciding to sell.The bigger issue remains demand.

What Does This Mean If You're Selling?

I've been giving sellers essentially the same message for the past year and a half.In a declining market, time can cost you money.If you need to sell, holding onto the price your neighbour received a year ago, six months ago or sometimes even two months ago can be a very expensive strategy.You don't have to sell.But if you've already decided that you're going to sell, waiting for the market to validate an outdated price can result in eventually accepting less.That's one of the most difficult things about selling in a declining market.Your competition isn't necessarily the house listed beside you today. It's the next comparable property that sells for less.

Buyers Have a Very Different Decision

For buyers, declining prices create a different dilemma.If you wait, there's certainly a possibility that the sticker price of the property you want will be lower.That's one of the reasons buyers continue to sit on the sidelines.But there are also people who genuinely need or want to buy a home, and today's market is creating opportunities that didn't exist several years ago.Detached homes have become less expensive. Condos have come down. Buyers have more selection, more time and generally more negotiating power.Perhaps most importantly, we're beginning to see opportunities for people who actually want to live in these homes rather than simply buying them as investments.I think that's healthy for the long-term housing market.

This Could Also Be a Good Move-Up Market

Falling prices aren't automatically bad news for every existing homeowner.Suppose you own a smaller property and eventually want to move into a larger home.Your existing property may have fallen in value, which obviously doesn't feel good.But if the more expensive property you want to buy has fallen by a larger dollar amount, the gap between the two homes may actually have narrowed.In that situation, moving up could require a smaller additional mortgage than it would have at the peak.That's why I don't think declining prices automatically mean everybody should stop buying or selling.There are winners and losers in every market.What matters is how the current conditions affect your particular situation.

Are Fraser Valley Prices Near the Bottom?

At this point, I'm still not prepared to say that they are.Prices continue to decline and sales remain extremely weak.Until we see a meaningful and sustained change in those underlying numbers, I think it's reasonable to expect continued pressure on prices.That doesn't mean prices will fall forever.And there are a few small indicators beginning to move in a more encouraging direction.But I'm not interested in calling a bottom simply because we want there to be one.My job as a real estate agent isn't to tell people that the market is good or bad. It's to explain what the market is actually doing so they can make better decisions.If you're selling, buying, downsizing or moving up, the exact same market can affect you very differently.Understanding that difference is far more useful than trying to decide which political side is responsible for it.

Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty