How Canada’s Retail Slump, Trump’s Trade War, and a Historic Wealth Shift Will Shape Vancouver’s Presale Housing Market

As Vancouver’s real estate market moves further into 2025, contradictory economic forces are reshaping the landscape, particularly for presale properties.

1. Canada’s retail sector contracted by 0.4% in January, following an unexpected surge of 2.5% in December—the largest jump since May 2022. This reflects growing consumer uncertainty amid rising economic pressures.
2. Trump’s 25% tariff on Canadian goods has been temporarily suspended for one month, but fears of long-term economic disruption persist.
3. A massive $1 trillion intergenerational wealth transfer is set to take place between 2023 and 2026, as baby boomers pass down assets to their millennial and Gen X children.

These forces push and pull at Vancouver’s presale housing market. Will economic anxiety stall new projects, or will inherited wealth drive demand and send prices surging? Let’s explore.

1. The Consumer Slowdown: Retail Contraction Reflects Growing Market Uncertainty

Canada’s Retail Sales Decline in January 2025

After a strong 2.5% jump in December 2024, Statistics Canada reported a 0.4% decline in retail sales for January 2025—the first contraction in seven months. (Financial Post)

What Does This Mean for Vancouver’s Presale Market?

Retail sales are often seen as a key indicator of economic health. A decline suggests weakening consumer confidence, which could directly impact presale demand in several ways:

1. Buyers Become Cautious
   • Prospective homeowners, especially first-time buyers, may delay purchasing presale units, fearing rising costs, job insecurity, or economic downturns.
   • This could slow absorption rates, leading to longer sales cycles for new projects.
2. Developers Adjust Strategies
   • If buyers hesitate, developers may delay launches, adjust pricing, or offer more aggressive incentives (e.g., deposit structures, closing rebates).
   • This could benefit buyers who remain in the market, as they may find better deals.
3. Luxury and High-End Presales May Struggle
   • The slowdown could impact higher-end projects, as investors and wealthy buyers wait for more certainty before committing large capital.

2. Trump’s 25% Tariff and Economic Uncertainty

A Temporary Reprieve: Tariff Suspended for One Month

Trump’s initial announcement of a 25% tariff on Canadian goods in early February sparked fears of economic disruption. However, after negotiations, he agreed to temporarily suspend tariffs for one month. (Hunton)

Canada’s Response: Retaliatory Tariffs on U.S. Goods

In retaliation, Canada imposed a 25% tariff on $155 billion worth of U.S. goods, with $30 billion taking effect on February 4 and more to follow after a 21-day consultation period. (Reuters)

How Do Tariffs Affect Vancouver’s Presale Market?

The temporary suspension provides a moment of relief, but uncertainty still looms, creating risks and opportunities for real estate:

1. Higher Construction Costs
   • A weaker Canadian dollar (CAD) makes imported materials more expensive.
   • Developers may raise prices on presale units to offset rising costs.
2. Buyers May Wait for Economic Clarity
   • Some investors and homebuyers may hold off on presale purchases until trade negotiations become clearer.
   • This could slow demand, especially for high-rise concrete projects, which require higher upfront investment.
3. Foreign Investment Could Increase
   • A weaker CAD makes Canadian real estate cheaper for international buyers.
   • Foreign investors may step in, absorbing some of the demand lost from hesitant local buyers.

3. The $1 Trillion Wealth Transfer: A Game-Changer for Presales?

The Largest Wealth Transfer in Canadian History

Between 2023 and 2026, an estimated $1 trillion will pass from baby boomers to their millennial and Gen X children, marking a historic financial shift. (CBC)

How This Wealth Transfer Could Boost Vancouver’s Presale Market

1. Younger Buyers with Increased Purchasing Power
   • Millennials and Gen Xers receiving inheritances may enter the housing market earlier than expected.
   • Many will invest in real estate, including presales, to grow their inherited wealth.
2. Higher Demand for Presale Units
   • Newfound financial resources could push more buyers into the presale market, especially those looking for long-term investments.
   • This could drive higher absorption rates, particularly for mid-market condos and townhomes.
3. Could Supply Keep Up?
   • If developers fail to launch enough new projects, an influx of wealth-driven buyers could tighten supply and drive up presale prices.

4. Will Supply Grow or Will Prices Rise?

The big question for Vancouver’s presale market is whether increased demand from inherited wealth will lead to new supply—or just higher prices.

• If developers respond with new projects, the market could absorb wealth-driven demand, keeping prices stable.
• If economic uncertainty slows new projects, presale prices may rise due to limited supply.

Two Possible Scenarios for 2025

Scenario 1: A Balanced Market

• The Bank of Canada cuts interest rates further, increasing affordability.
• Developers proceed with projects, keeping supply and demand balanced.
• Prices stay stable, with incentives attracting buyers.

Scenario 2: A Tight Market, Rising Prices

• Developers hesitate due to construction cost concerns and economic uncertainty.
• Demand from wealthier millennials and Gen Xers outpaces supply.
• Presale prices rise sharply, squeezing out middle-class buyers.

5. What to Watch for in Vancouver’s Presale Market in 2025

1. Bank of Canada’s Next Move
   • Will there be another rate cut?
   • Lower rates = more buyer confidence & investment activity.
2. Final Decision on Trump’s Tariffs
   • If tariffs resume, expect higher construction costs & slower new developments.
   • If negotiations succeed, economic stability could fuel new projects.
3. How Developers Respond to Wealth-Driven Demand
   • Will they launch new presale projects to meet demand?
   • Or will limited supply drive price hikes?

Key News and Market Events Buyers Should Watch Before Making a Presale Decision

Vancouver’s presale real estate market sits at the intersection of economic uncertainty and massive financial change.

• Short-term concerns, like retail slowdowns and tariff uncertainty, may hold back some buyers.
• Long-term forces, like the $1 trillion wealth transfer, could fuel demand for years to come.

For developers, the challenge is timing new projects to capture demand without overextending in an unpredictable economy.

As 2025 unfolds, the Vancouver presale market will be shaped by economic policy, global trade, and generational wealth dynamics—making it one of the most intriguing real estate sectors to watch.

1. Bank of Canada’s Next Interest Rate Decision (March & April 2025)

 Next Announcement: March 6, 2025 & April 10, 2025
 Why It Matters:

• If the BoC lowers rates again, mortgage rates could drop, making presale units more attractive and affordable.
• If rates remain the same, buyers may hesitate, waiting for further reductions.
• If inflation rises unexpectedly, rates could stay high longer, potentially dampening demand.
   Where to Check: Bank of Canada

2. Trump’s Final Decision on Tariffs (March 2025)

 One-Month Tariff Suspension Ends: Early March 2025
 Why It Matters:

• If Trump reinstates the 25% tariffs, construction costs could rise, impacting presale pricing.
• If Canada negotiates a deal, the real estate market may stabilize, boosting buyer confidence.
• A prolonged trade war could slow economic growth, affecting job security and affordability.
   Where to Check: Financial Post | Bloomberg

3. British Columbia’s Spring Budget 2025 (Late March – Early April 2025)

 Expected Release: Late March or Early April 2025
 Why It Matters:

• Potential new housing policies or tax incentives could make presales more appealing.
• If the government introduces buyer incentives (e.g., tax breaks, grants for first-time buyers), demand could increase.
• If new development regulations raise costs for builders, expect higher presale prices.

4. February & March Housing Market Reports from REBGV & CMHC

 Reports Released Monthly (Mid-March & Mid-April)
 Why It Matters:

• If presale absorption rates increase, buyers may face higher prices and fewer incentives.
• If demand remains weak, developers may offer better deals.
• Look at pre-construction project launches to see if supply is keeping up with demand.
   Where to Check:
• Real Estate Board of Greater Vancouver (REBGV)

5. Will the $1 Trillion Wealth Transfer Start Affecting Sales? (Ongoing Trend in 2025)

 Watch For: Rising luxury and investment property sales.
 Why It Matters:

• If millennials and Gen X buyers start using inherited wealth to buy homes, presale demand could surge.
• A sudden increase in demand could push prices higher if developers don’t launch enough new projects.
• If economic uncertainty slows the impact of the wealth transfer, prices may stay stable longer.

6. Government’s Decision on Foreign Buyer Ban & Speculation Tax (Mid-2025)

 Expected Updates in Mid-2025
 Why It Matters:

• The Foreign Buyer Ban (2022-2027) currently prevents most non-residents from buying property.
• If the ban is adjusted or lifted early, foreign investors could re-enter the market, increasing demand.
• The Speculation & Vacancy Tax may also be updated, affecting investor decisions on presales.

7. Upcoming Presale Project Launches & Incentives

 Throughout 2025
 Why It Matters:

• Some developers may launch new projects to meet demand from the wealth transfer effect.
• Others may delay projects if economic uncertainty continues.
• Watching new incentives (lower deposits, rental guarantees, price guarantees) can help buyers lock in better deals.