Garry Marr: Should you buy a house in the middle of a trade war?

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Active inventory was down about 11 per cent from a year earlier, as new listings dropped more than 14 per cent during the period, according to TRREB. Those long-term owners with rising stock market portfolios have no reason to list a home.

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Still, while the market may be tightening, there is no question that trade wars “might rekindle” fears about what is one of the biggest financial decisions for new buyers, said Robert Hogue, assistant chief economist at Bank of Montreal. “Those people might stay on the sidelines,” he said.

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“But there are probably a lot more who don’t feel like they are impacted,” said Hogue, adding that some people have been holding off a few years to buy.

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However, job security fears drive homebuying decision-making, Hogue said, pointing to the early 1990s, when a weak job market affected housing demand in places such as Ontario.

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Today, however, “The unemployment picture is not rosy, but it’s not a horrible picture,” said Hogue. “With the trade war, there was the initial shock last year but now people see there is a lot of noise.”

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Hogue expects people to look at the business they work for before deciding. Someone in the auto sector, for instance, may have a different viewpoint than elsewhere in the economy.

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“But people have been delaying making a purchase for years now, and that pent-up demand is accumulating,” he said.

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The other pressing issue for Canadians is interest rates, and Hogue doesn’t see variable rates, which are tied to prime, dropping even more, nor rising much.

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Neil Drepaul, a broker and director at Canadian Mortgage Services, believes homeowners, many now facing renewals after pandemic-era rates fell below two per cent on five-year mortgages, will be making many decisions, from refinancing to taking out equity from their house based on job security.

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If you still have your job and you are renewing, the good news is you will likely have no problems, although you will be facing a five-year fixed rate closer to four per cent, a rate that has jumped in the past few weeks.

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“You are not going to have to be requalified on a renewal,” he said, adding he hasn’t seen financial institutions crack down on workers tied to some sectors.

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During the COVID-19 pandemic, that wasn’t the case. Drepaul said underwriters looked at certain industries and held off loans.

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“We are not seeing that yet, but in the months ahead they might look at the auto sector, the steel sector and say this is a risky client,” he said.

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Credit hasn’t tightened yet, leaving consumers with high-ratio mortgages with less than a 20 per cent down payment able to get a floating rate as low as 3.5 per cent, a considerable 50-basis-point gap over locking in and one more thing for the new homebuyer to consider.

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Phil Soper, chief executive of Royal LePage, one of the largest brokerages in the country, said the company’s own surveys show the number one reason people are not jumping into the market is uncertainty.

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“It had nothing to do with interest rates or the price of homes but the behaviour of Americans and specifically the president,” he said. “It has been a material and very big drag on the market. The fundamentals are there for a stronger (housing market).”

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Soper doesn’t dismiss concerns for people who work in the auto sector, which indirectly impact almost 500,000 people, but he points to places such as Alberta, where housing sales are still slow.