Tariffs, Inflation, and Real Estate: How Today’s Economy Could Shape Tomorrow’s Market

Disclaimer: The following reflects my personal observations and professional perspective as a South Okanagan Realtor with experience in both real estate and construction. It is not financial advice. For personalized strategies, please consult a qualified professional.

A Roller Coaster Economy That Hits Close to Home

If you’ve been following the headlines lately, it’s been a wild ride — one day we hear inflation is cooling, the next it’s climbing again. Tariffs are announced, walked back, then reintroduced in new forms.

This constant on-again, off-again economic narrative leaves both businesses and individuals second-guessing their next move.

In real estate, uncertainty like this always makes its presence felt:

• Buyers hesitate.

• Sellers wonder if now is the right time to list.

• Investors sit back, waiting for “the perfect moment” — which often means missing opportunities altogether.

Over the past year of tracking the South Okanagan market closely, I’ve noticed a fascinating pattern: price reductions, a pause in inventory growth, and flat equity despite inflation nudging nominal prices up.

Inflation and Tariffs: The Unpredictable Duo

Inflation is back — but not in the same way we saw in decades past. Much of today’s price pressure comes from supply shocks, and tariffs are adding another layer of complexity.

In the construction world, where I have deep roots, tariffs don’t just impact the immediate cost of materials — their effects ripple over four to five months.

What this means:

• Companies scramble to adjust pricing and buffer profit margins.

• Builders and suppliers hold frequent meetings to figure out what next week might look like.

• Lumber mill closures in BC and production shifts south drive costs higher.

As building and renovation costs climb, buyers and sellers adapt based on what they can afford — or what they believe is coming next.

South Okanagan Market Snapshot: Summer 2025

From a local perspective, here’s what I’ve been seeing:

• 70–80 price reductions every week across 2,000+ listings.

• Inventory growth stalled this summer — in fact, it has declined over the last few weeks.

• Equity growth has been flat for the last two years despite inflation increases.

We’re also in the middle of the South Okanagan Summer Slowdown. People are outside, enjoying life post-pandemic — great for lifestyle, but it does slow market activity.

Foreign Buyer Ban and BC’s 20% Tax: Double-Edged Policy

Two policies are reshaping the buyer landscape:

1. Federal Foreign Buyer Ban – Extended to January 1, 2027, preventing most non-Canadians from purchasing residential properties.

2. BC’s 20% Additional Property Transfer Tax – Applied to foreign buyers, adding significant upfront cost.

The effect:

• Reduces competition, which can help local buyers.

• Frustrates sellers with fewer offers and longer days on market.

From an economic perspective, removing foreign capital without a proportional increase in job creation risks stagnating the market.

Interest Rates and the Mortgage Landscape

As of August 2025:

• 5-year Government of Canada bond yields: ~3.75% (highest since April).

• Fixed mortgage rates: Slight increases of 5–10 basis points.

• Early August saw a small easing, hinting fixed rates could soften.

Buyer takeaway:

• Fixed rates provide stability in uncertain times.

• Variable rates may be worth considering if you expect easing.

• In Canada, 5-year mortgage resets give you an opportunity to re-strategize mid-term.

Buyer Strategies in Today’s Market

Right now, the South Okanagan is a buyer’s market, which means more room to negotiate.

Tips for buyers:

• Act before construction costs rise due to tariffs.

• Work with a trusted mortgage broker to tailor a fixed/variable strategy.

• Don’t wait for “perfect” — the best time to buy is often only clear in hindsight.

• Use the slowdown to your advantage — sellers may be more open to negotiation.

Seller Strategies in Today’s Market

Pricing and presentation are everything.

Tips for sellers:

• Price strategically from day one. Overpricing leads to chasing the market down.

• Stage your home to help buyers envision themselves in the space.

• Highlight the positives so buyers focus less on minor flaws.

• Stay competitive — in a market with frequent price reductions, standing out matters.

Investor Outlook: Opportunity with Caution

Many investors are waiting for more dramatic market shifts. Stricter tenancy laws in BC have also made some cautious.

However, right now investors may find:

• Lower competition.

• Better negotiating positions.

• Opportunities to add value before material costs increase.

Final Thoughts: Perspective and Timing

Markets are cyclical. We’ve seen periods of rapid equity growth and periods like this — flat but full of potential.

Tariffs, inflation, policy changes, and interest rate shifts all matter, but the most important thing is having a tailored strategy for your situation.

If you’re considering a move in the South Okanagan, now is a unique moment. The opportunities are here — you just need the right plan.

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