Canada Real Estate 2026: ‘Great Rebalancing’ Predicted as Prices Remain Flat
Toronto, ON – The Canadian real estate market is bracing for a period of “Great Rebalancing” in 2026, according to a new forecast from real estate expert Jongwook Kim of Right at Home Realty Inc. While a full-blown crash isn’t anticipated, neither is a return to the rapid price growth seen in recent years. The report, released today, points to stable interest rates as a positive sign, but highlights a dramatic shift in population dynamics as a key factor keeping prices largely unchanged. This is urgent breaking news for homeowners, potential buyers, and investors navigating a complex market.
Economic Outlook: Slow Recovery & Stable Rates
Canada’s economic recovery is expected to be modest, with GDP growth projected between 1% and 1.5% in 2026. Inflation, while potentially experiencing a temporary uptick, is forecast to settle around a manageable 2%. Crucially, the Bank of Canada is expected to maintain the base interest rate at 2.25%, providing a degree of stability that has been sorely lacking in the past few years. This stability is a welcome change, offering predictability for both buyers and sellers. The unemployment rate is also expected to remain relatively low, hovering between 6-7%, further supporting a gradual economic recovery.
Positive Forces: Interest Rate Stability & Supply Issues
The freeze on interest rate hikes is a major turning point. After aggressive increases in 2023, the central bank’s commitment to maintaining the 2.25% rate is fostering a sense of confidence. “The biggest issue wasn’t just *high* interest rates, but the uncertainty surrounding them,” explains Kim. A stable labor market, with unemployment gradually easing from a peak in 2025, also contributes to a more balanced outlook. However, a persistent issue continues to plague major urban centers: a severe shortage of housing supply. While construction is booming in cities like Calgary, Edmonton, and Ottawa, Toronto and Vancouver are experiencing historically low housing starts, with Toronto potentially hitting a 30-year low by mid-2025. This lack of supply is preventing more substantial price declines.
The Population Shift: A Game Changer for the Market
However, the most significant factor influencing the 2026 forecast is a dramatic reduction in Canada’s population growth. The federal government is lowering the annual immigration target to 380,000, down from 395,000 in 2025. More impactful is the substantial decrease in temporary residents – a cut from 670,000 in 2025 to between 385,000 and 370,000 annually for the next three years. This includes a 49% reduction in international students and a 37% decrease in temporary foreign workers. According to the Canada Mortgage and Housing Corporation (CMHC) and TD Economics, this will significantly dampen demand in the rental market, particularly in Ontario and British Columbia, and negatively impact both pre-sale and resale condo transactions. This isn’t just a number; it represents a fundamental shift in the demand drivers of the Canadian housing market.
What This Means for Buyers and Sellers
The Canadian Real Estate Association (CREA) anticipates a modest 4.5% increase in the number of transactions in 2026. However, don’t expect a surge in prices. Unsold inventory remains high at 45.1%, and the Months of Inventory (MOI) currently sits at 3.1 months in Ontario. Prices are expected to remain flat for the first three quarters of the year, with a slight rebound possible in the latter half, *excluding* the condominium market. Royal LePage forecasts single-family homes in the Greater Toronto Area (GTA) will decline by 1%, while condos could see a more significant drop of 6.5%.
Condo Market: Facing Headwinds
The condominium market is particularly vulnerable. The combination of reduced non-resident demand (international students and temporary workers) and an oversupply of units built in recent years is expected to drive prices down in 2026. The Toronto area is predicted to be especially affected. This presents a potential opportunity for some buyers, but a challenge for those looking to sell.
The Canadian real estate market in 2026 isn’t about dramatic swings; it’s about a return to a more sustainable, balanced state. It’s a market where careful consideration, informed decision-making, and a long-term perspective are more crucial than ever. For the latest insights and personalized guidance, explore more expert analysis and market reports at Archyde.com, your trusted source for breaking real estate news and in-depth market intelligence.
