The dreaded “R” word resurfaced toward the end of May, just as North Vancouver real estate was attempting a modest comeback. Canada slipped into a “technical recession” after overall economic activity posted a small decline in the first quarter of 2026, following a larger drop at the end of 2025. While not catastrophic, economists generally prefer not to see the economy contract, especially when inflation is still above the 2 percent target and currently sitting at 2.8 percent.
Typically, a weakening economy prompts the Bank of Canada to lower interest rates to encourage spending and investment. With inflation still elevated and the downturn relatively mild, there is little expectation of rate cuts in the near term.
In real estate, we are often asked how broader economic conditions might affect a client’s plans to buy or sell, or how they might influence property values. A softer economy simply adds to the list of factors giving buyers pause: trade tensions with the US, the war in Iran, rising living costs, and mortgage rates that appear to be climbing again.
We do not dismiss these concerns. They absolutely influence people, making multi-million dollar decisions. While some buyers are directly affected through their business or employment, the larger impact is psychological. Economic or geopolitical volatility gives people a reason to think that now is not the right time, and that hesitation can become self-fulfilling if enough people feel the same way.
On the other hand, when others are holding back, opportunities can emerge. With fewer buyers in the mix, some purchasers may find they can transact with less competition. The bigger risk may be waiting for conditions to normalize, only to find the North Shore back in a familiar pattern where nearly every new listing attracts multiple interested parties.
To answer the question more directly: only a small fraction of local buyers are materially affected by the war in Iran beyond slightly higher gas and food prices. Only a small fraction relies on direct US trade for their employment. And only a small fraction work in sectors that are highly sensitive to economic growth. The vast majority continue with their lives, saving and investing, spending on holidays and new vehicles, and of course, buying and selling real estate.
It is tempting to worry that these issues will worsen and push the economy into a deeper downturn. History offers far more examples of economies recovering, conflicts resolving, and trade disputes being settled when the stakes are high. Even when it feels unlikely in the moment, resolution is far more common than escalation.
Let us hope for that outcome and for continued stability in the local real estate market, giving buyers a chance to move up and sellers an opportunity to protect their hard-earned equity.
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