Last Updated on October 24, 2023 by Neil Sharma
Toronto’s housing market could in for a bumpy ride after the White House threatened to impose auto tariffs.
According to TD Economics, it is estimated that the tariffs, if levied, could cause 160,000 net jobs to be lost north of the border. However, the overwhelming majority would be in Ontario and that spells bad news for the housing market.
Broker Brett Starke says, in particular, the Bank of Mom and Dad would take the biggest hit.
“Economic uncertainty translates through the real estate market in some ways,” said the heard of the Starke Realty Team. “One of the things people aren’t talking about is how it will affect the bank of mom and dad because a lot of people from the east and west ends are millennials still relying on their parents for their first down payments or to help with the rent.”
He added that a trickledown effect would effect would manifest in Toronto almost instantly.
“Their parents would be losing these jobs,” said Starke. “A lot of people who live and rent downtown grew up in the GTA. A lot of transactions we see for rentals and purchases are still fueled by the bank of mom and dad.”
Irma Rovella, a sales representative with REMAX Real Estate Centre, says that Toronto real estate will doubtless be impacted by turmoil in the automotive industry.
“Real estate has always followed the auto industry,” she said. “If the money isn’t there for people to spend, they’re not upgrading their houses because that’s a big investment.”
However, she cautioned that the tariffs are not yet a certainty.
CanWise Financial’s president and broker of record predicts a housing downturn in the form of downward pressure on housing.
“A hundred and sixty thousand jobs are a little less than 1% of the employed people in Canada,” said James Laird. “It’s significant, certainly, and if we lost 1% of the labour force it would put downward pressure on housing.”
While not everybody would find employment again, it’s a safe bet that some, if not most, would—even in different industries. The recent turmoil in Alberta’s oil sector springs to mind, added Laird.
“We can look at Alberta, where a lot of jobs were lost in the oil sector a few years ago,” he said. “There was downward pressure on housing and the number of transactions slowed down as well, but I don’t think anyone categorizes that as a housing collapse. It was a housing downturn. I think if the tariffs happened it would be a housing downturn again.”
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Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
