What Can We Expect In The Year Ahead?
If 2022–2025 felt like whiplash, 2026 is shaping up to be the “what now?” year for Canadian real estate.
Not a crash, not a boom… more like a slow, slightly awkward reset where fundamentals finally matter again. For investors and homeowners who’ve been sitting on the sidelines (or lying awake at night thinking about renewals), the big question is:
Are we heading for a decline, a stabilization, or a quiet recovery in 2026?
Short answer: any of the three is possible, depending on where you are and what segment you’re in. Let’s unpack it.
The backdrop: lower rates, softer growth, messy sentiment
A few things we already know heading into 2026:
- The Bank of Canada has been cutting, bringing the overnight rate down to 2.25% as of October 29, 2025, after a series of gradual reductions from the mid-4% range in 2024.
- Many projections now see the policy rate drifting toward ~2% in 2026, which is close to “neutral” territory – not stimulative, not restrictive.
- At the same time, GDP growth expectations are pretty modest – roughly 1–1.8% in 2025–2026, depending on whose forecast you read.
So we’re getting rate relief but not exactly an economic party. Add in tariff noise, tighter government budgets, and a still-painful cost of living, and buyer psychology is cautious at best.
From a housing lens, the major agencies don’t fully agree:
- CREA’s January 2025 forecast:
- National home sales up 4.5% in 2026
- National average price up 3.3% to about $746,000
- CMHC’s 2025 Housing Market Outlook:
- Sales and prices recovering in 2026–27, helped by lower mortgage rates and better job markets
- But construction slows and affordability remains a grind.
- RBC’s August 2025 update:
- Prices edge lower into 2026, with the steepest drops in Ontario and B.C.
- Nationally, RBC sees about a 0.7% price decline in 2026 after a flat 2025.
- A Reuters poll of housing experts pegs 2025 prices down ~2%, then largely stagnant in 2026 – especially in Toronto and Vancouver – as the market digests earlier excesses.
So the data is sending mixed messages. That’s actually the point: 2026 probably won’t be one clean story. It’ll be three overlapping scenarios, playing out differently by region and asset type.
Scenario 1: Further decline – the “slow bleed” correction
There is a plausible path where 2026 still feels like a grind down, especially in overheated pockets of Ontario and B.C.
What would drive a further decline?
- Renewal shock really bites
Hundreds of thousands of owners renewing 2025–2026 at rates still higher than their original 2020/2021 mortgages. Even with cuts, carrying costs may be up 30–50% for some households, forcing:- Forced sales in marginal situations
- Investors offloading negative-cash-flow condos
- Pre-con buyers walking from assignments that no longer pencil
- Inventory quietly builds
RBC is already warning about excess supply and strong competition among sellers in Ontario and B.C., with elevated listings and slower absorption. - Developers repricing or cancelling
CMHC notes builders are delaying or scaling back projects as financing costs and pre-sale demand remain soft.
That can trigger:- Discounting on remaining inventory
- Incentives that quietly reset effective pricing
- Pressure on resale values in similar product types
- Macro wobble
If the economy underperforms those already modest 1–1.8% growth forecasts, or trade issues escalate, you could see job losses in specific sectors that hit purchasing power and sentiment hard.
Where is this most likely?
- High-rise condo markets in Toronto, Vancouver, and some secondary urban cores
- Investor-heavy submarkets where rents are flattening but expenses keep rising
- Luxury and recreational properties that were bid up aggressively during the pandemic FOMO years
Investor read:
If we get this “slow bleed” version of 2026, it becomes a stock-picker’s market in real estate:
- Deep discounts on distressed or tired inventory
- Better entry points for value-add repositioning
- Strong negotiation leverage for buyers with capital and patience
This is where people who’ve been waiting with dry powder quietly build their next cycle’s portfolio.
Scenario 2: Sideways & stabilized – the “boring but healthy” plateau
Honestly, this might be the most probable national story for 2026.
In this scenario, prices don’t run… but they don’t fall off a cliff either. They wobble within a few percentage points while fundamentals slowly catch up.
What would support stabilization?
- Rates settle into a sweet-ish spot
With the overnight rate drifting toward ~2%, fixed mortgage rates soften just enough to:- Take the panic out of renewals
- Bring some first-time buyers back
- Give move-up buyers confidence to list and trade up
- Wages and employment quietly improve
CMHC and RBC both expect better labour market conditions and job prospects in 2026, which helps support demand even if prices don’t surge. - Population growth normalizes, not collapses
Immigration levels are being adjusted, but we’re not turning off the tap. Demand cools from the peak, yet there’s still a structural need for housing, especially family-sized rentals and ground-oriented homes in livable communities. - Affordability improves at the margin
A combination of:- Lower rates
- Slightly softer or flat prices
- Income growth
makes ownership somewhat more attainable than in the 2022–2024 stretch, even if it doesn’t feel “cheap”.
What does this look like on the ground?
- National price change in 2026 somewhere between -2% and +3% (which neatly brackets RBC’s slightly negative view and CREA’s more positive one)
- More balanced conditions:
- Fewer wild bidding wars
- Conditional offers back as the norm in many markets
- DOM (days on market) lengthening a bit, but not alarming
Investor read: A stabilized 2026 rewards operators, not speculators.
- Cash flow, tenant quality, and asset management matter more than riding cap-rate compression.
- You win by:
- Buying below replacement cost
- Adding bedrooms, suites, or dens to boost income
- Converting underperforming product (e.g., small condos, older stock) into what’s actually in demand
For end-users, this is the year where patience + preparation beats panic. You may not “steal” a property, but you can finally make rational, numbers-driven decisions.
Scenario 3: Gradual improvement – the “quiet comeback”
The third path is a slow but genuine recovery, where 2026 looks like the first “normal” year in a long time.
This is essentially CREA’s and parts of CMHC’s base case:
- CREA: sales up 4.5%, average prices up 3.3% in 2026.
- CMHC: market regains momentum 2026–2027 as lower mortgage rates and better incomes draw buyers back.
What would have to go right?
- Rate cuts land perfectly
BoC navigates that narrow lane of:- Easing enough to support housing and business investment
- Avoiding a resurgence in inflation
- Keeping the loonie and capital flows reasonably stable
- Tariffs and trade noise ease
If global tensions dial back and Canadian exports catch a bit of a tailwind, business confidence improves. That filters through to:- Stronger job growth
- Better small-business and self-employed income
- More willingness to take on a mortgage or buy a second property
- Supply is constrained in the right places
Developers have already delayed or cancelled marginal projects. CMHC expects housing starts in major markets to be lower than 2024 levels, which ironically tightens future supply.
Fewer completions + revived demand = upward pressure on prices, particularly:
- Starter homes in established suburban markets
- Purpose-built rentals in family-friendly neighbourhoods
- Well-located infill and missing-middle product
- Sentiment finally flips
You’ll see it in small ways first:- Open houses get busier
- “We’ll wait another year” turns into “let’s at least get pre-approved”
- Investors shift from fear to opportunistic curiosity
Investor read: A modest recovery in 2026 can be very favorable if you’re not over-leveraged:
- You lock in still-reasonable rates
- You buy while memories of the downturn keep others cautious
- You ride gradual rent and value growth without the insanity of 2021
This is where disciplined buyers quietly set themselves up for the next real up-cycle.
So which 2026 are we likely to get?
Here’s my speculative take (flagged as opinion) based on the data and current policy backdrop:
- Nationally:
2026 most likely feels like Scenario 2 with pockets of 1 and 3 layered in. Flat to slightly positive nationally, but:- Some submarkets in Ontario/B.C. may still see mild price declines
- More diversified or affordable regions could post modest gains
- Major metros (Toronto / Vancouver):
I’d expect:- Condos and investor-heavy product: closer to Scenario 1 → mild declines / sideways
- Ground-oriented, family-friendly stock in good school districts: more Scenario 2/3 → stable to gently rising
- Secondary markets & strong job hubs:
Places with:- Solid local economies
- Reasonable price points
- Net in-migration
are well-positioned for Scenario 3-lite – not booming, but outperforming the national average.
What’s almost certainly not coming back in 2026 is the “buy on Friday, flip on Monday” energy. And that’s a good thing.
How to position yourself for any of the three paths
No matter which flavour of 2026 shows up in your market, a few principles hold:
1. Underwrite deals with pain baked in
Assume:
- Rents take longer to achieve than you’d like
- Cap rates don’t compress
- Renewal rates are uncomfortable but survivable
If a deal still works under those assumptions, you’re in a good spot.
2. Focus on resilience, not just upside
Resilient assets in 2026 will be:
- Properties where end-user demand is deep (families, essential workers, stable industries)
- Well-located rentals with functional layouts and right-sized units
- Housing that fits real budgets, not just investor pro formas
This lines up with what PwC highlights in its Emerging Trends in Real Estate 2026 report: a big pivot toward purpose-built rental, mid-market housing, and community-oriented development, not just luxury condos.
3. Treat uncertainty as your competitive edge
Most people freeze when the story isn’t clear. 2026 won’t be clear. That’s your advantage if you:
- Track data monthly, not just headlines
- Stay close to mortgage brokers, planners, and local agents on the ground
- Have financing options lined up before the “perfect” deal appears
If the last few years were about emotion and FOMO, 2026 is about discipline and design. Designing your portfolio, your financing, and your exit strategies around a world where:
- Rates are lower, but not free
- Prices are more rational, but not cheap
- Opportunities are there, but only for people willing to do the work
Whether the market dips a little more, flattens out, or starts to heal, the people who win in 2026 will be the ones who act with intention while everyone else waits for certainty.
Let’s build wealth the smart way – together!
And, if you’re thinking about buying, selling or investing in Durham Region or Toronto, let’s chat! I can be reached at 647-896.6584, by email at info@serenaholmesrealtor.com or by filling out this simple contact form. You can also kick off your search for Durham Region homes for sale by clicking here.
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