f you have been following the news, you know the headlines. Twenty-five percent tariffs on Canadian lumber. Steel and aluminum hit hard. Retaliatory measures going back and forth. The trade war between Canada and the United States is no longer hypothetical. It is happening, and it is affecting real estate in ways that most people are not fully connecting yet.

Here is how it all fits together, and why the impact on Metro Vancouver property owners and buyers may be bigger than the headlines suggest.

Construction Costs are climbing, quietly

The most direct impact of tariffs on real estate is the cost of building new homes. Lumber, steel, and aluminum are foundational construction materials, and a 25% tariff on these imports adds real dollars to every project.

Current estimates suggest tariffs are adding upwards of $9,000 or more to the cost of a single new home. For larger projects, the numbers scale quickly. A 50-unit apartment building does not absorb an extra $450,000 in material costs without that showing up somewhere, either in higher purchase prices for buyers, thinner margins for developers, or projects that simply do not get built.

This last outcome is the one that matters most for the market. When construction costs rise to the point where projects are no longer financially viable, developers pause or cancel. We are already seeing this. Housing starts in BC have been declining, and the pre-sale condo market has seen sales volumes drop dramatically. There are roughly 2,500 unsold condo units sitting in Greater Vancouver right now. Developers are turning to creative incentives like rent-to-own agreements and upgrade packages to move inventory.

The units that do not get built today become the supply shortage of 2028 and 2029. That is the part most people miss.

Buyer confidence is the real casualty

Canada does not export houses to the United States. Tariffs do not directly tax the sale of a home. So why are they affecting the housing market?

Because tariffs destroy confidence, and real estate runs on confidence.

The BC government has estimated that sustained tariffs could result in a $69 billion economic loss by 2028 and 124,000 job losses over three years. The Bank of Canada has acknowledged it cannot restore the economy to its pre-tariff path. These are not abstractions. They translate directly into anxiety for anyone considering the largest purchase of their life.

Metro Vancouver home sales in early 2026 are running roughly 30% below the 10-year seasonal average. Prices are down about 7% year-over-year. Homes are taking 100 days to sell. The sales-to-active listings ratio is sitting in buyer's market territory for detached homes.

The data does not lie. Buyers are scared, and tariff uncertainty is a meaningful part of why.

The Bank of Canada is stuck

Normally, when the economy slows, the Bank of Canada cuts rates to stimulate activity. It has been doing exactly that. But tariffs create a paradox for monetary policy.

Tariffs push up the cost of goods, which is inflationary. If the Bank cuts rates to help the economy, it risks making inflation worse. If it holds rates or raises them to fight inflation, it chokes off the demand that the housing market desperately needs.

The Bank has held its benchmark rate at 2.25% and has signaled caution. For mortgage holders and potential buyers, the message is that rates may not drop as much or as fast as many were hoping. Fixed mortgage rates, which are tied to bond yields rather than the Bank's overnight rate, have actually faced upward pressure from geopolitical uncertainty.

This is the environment sellers and buyers are navigating. Lower rates were supposed to be the catalyst for a market recovery. Tariffs are undermining that story.

Commercial real estate is more resilient than you think

Here is where the picture gets more nuanced. While residential real estate is absorbing the full force of consumer anxiety, commercial property in Metro Vancouver is telling a different story.

Industrial real estate in particular has shown resilience. Vancouver is a geographically constrained market and remains one of North America's most important trade and logistics gateways. Regardless of what happens with specific tariff policies, goods still need to move through this port. Large-format industrial space is being absorbed at an accelerating pace, and availability is projected to be cut in half by mid-2026.

Office leasing activity doubled in 2025 compared to 2024. Retail remains stable, supported by consumer spending that has been more resilient in BC than in most other provinces.

The key takeaway for commercial property owners: tariff noise is loud, but the fundamentals of well-located, income-producing assets in Metro Vancouver remain intact.

What happens if tariffs stay

The worst-case scenario is not a temporary disruption. It is a sustained trade conflict that becomes the new normal. If tariffs remain in place for years rather than months, the effects compound.

Construction costs stay elevated permanently, which means fewer homes get built. Fewer homes getting built means supply tightens further. Tighter supply, once demand eventually returns, means prices go higher than they would have otherwise. The irony of tariffs is that they may make the housing affordability problem worse in the medium term by choking off the new supply needed to bring prices down.

For property owners who already hold assets, this dynamic actually works in their favour. Existing properties become more valuable relative to replacement cost as new construction gets more expensive. For buyers, the math is less obvious but still worth considering: buying an existing property today at a 7% discount from peak may look like a very good decision three years from now if the supply picture continues to deteriorate.

What happens if tariffs get resolved

The best case scenario is a negotiated resolution to trade tensions that restores stability and economic confidence. If that happens, the housing market would likely see a meaningful uptick in activity relatively quickly. There is significant pent-up demand in Metro Vancouver. People need places to live. They have been waiting for confidence to return.

A tariff resolution, combined with continued low interest rates and improved economic outlook, could produce a snapback in sales volumes that catches many sellers off guard. Properties that are priced well and positioned correctly would move quickly.

The challenge is that nobody knows when or if a resolution comes. Building your strategy around a specific political outcome is risky. The better approach is to make decisions based on fundamentals and be prepared for multiple scenarios.

What smart buyers and sellers are doing right now

The buyers who are active in this market are not ignoring the uncertainty. They are using it as leverage. Sellers are more motivated. Negotiating power has shifted. Competition is minimal. The people buying right now are getting properties at prices and terms that would have been unthinkable two years ago.

The sellers who are succeeding are the ones pricing aggressively from day one. They understand that in a market where tariff fears and economic anxiety dominate the news cycle, overpricing a property is a guaranteed way to watch it sit. Accurate pricing, strong presentation, and working with a team that understands the current dynamics are non-negotiable.

For property owners not looking to sell, the message is simpler: hold. If your property is cash-flowing or serving your needs, short-term market noise should not change your strategy. The long-term fundamentals of owning real estate in a geographically constrained, gateway city with strong population growth have not changed.

Our take

At Iconic Properties Group, we have navigated markets through interest rate shocks, pandemic uncertainty, and policy shifts. Trade wars are a new variable, but the principles are the same. Focus on fundamentals. Price accurately. Move decisively when the opportunity makes sense. And do not let headlines make your investment decisions for you.

The tariff situation will evolve. The market will adjust. The question is whether you are positioned to benefit from that adjustment or react to it after the fact.

Iconic Properties Group is a Vancouver-based real estate team specializing in commercial and residential properties. For a confidential conversation about your real estate strategy, contact us at (778) 987-7029 or contact@