The aggregate price of homes, including condominiums, is projected to decline across greater Toronto by 4.5% year-over-year by the end of 2026 to $1,054,129, according to a new report.
While buyers of houses and condos have been hesitant when it comes to making homebuying decisions this year, the Royal LePage Market Survey Forecast expects Canada’s residential real estate market to post modest price gains next year and see increased sales activity, as improved affordability works to draw prospective buyers back into the market.
"First-time buyers and those searching in the country’s most expensive regions have a rare window to act on their home ownership plans at reduced prices," noted said Phil Soper, Royal LePage's president and chief executive officer, in the report. "While we don’t expect a sharp rebound, this improved affordability will rebuild market confidence among both buyers and sellers, setting the stage for more sustainable, albeit modest, price growth in 2026."
The forecast for 2026 stands in contrast to the current sluggish sales activity.
“Our fall market was more of a whisper than a roar. In a typical cycle, this would be one of the busiest times of the year to buy and sell, but that hasn’t materialized. It’s not simply that buyers are trying to time the best deal," said Shawn Zigelstein, broker and leader of Royal LePage's Team Zold, Royal. in the report. "Economic uncertainty is keeping many on the sidelines, particularly concerns around job security and ongoing tariff discussions."The report also attributed the recent languid home sales activity to return-to-office mandates, creating buyer hesitancy. “With more employers signalling a return to brick-and-mortar workplaces five days a week, many Canadians are unsure what their future commute will look like, making it harder to decide where to put down roots," the report said.
Moreover, new construction is projected to remain soft because an increasing number of builders are delaying project launches and curtailing their marketing efforts. In an effort to move surplus inventory, some developers are offering incentives such as reduced pricing or flexible closing timelines.
Montreal home prices expected to increase
Canada’s second-largest city is projected to see aggregate home prices increase by 5% year-over-year to $676,725 in the fourth quarter of next year, with condo prices forecasted to rise by 2.5% to $502,558, according to the Royal LePage report.
While demand for properties under $1 million in the city has been consistent throughout the year, it weakened last quarter, the report said, noting that economic turbulence is less pronounced in Quebec than elsewhere in Canada.
“Despite a slight dip in activity in October, and a more pronounced slowdown in the city centre and Laval, we are seeing that Quebec consumers seem less affected by economic uncertainty and trade tensions than in other parts of the country,” said Marc Lefrançois, a chartered real estate broker at Royal LePage Tendance.
Moreover, with the Bank of Canada’s overnight lending rate at 2.25%, on the lower end of its neutral range, buyers have considered borrowing costs reasonable enough to sustain housing demand, and Royal LePage said it expects will continue, if not slightly improve, next year. Inventory, however, is increasing — albeit only slightly — and with more choices, buyers are moving to Montreal’s suburbs where homes are generally more affordable for young families.
Home prices to decline in Vancouver
The aggregate price of a Vancouver area home is anticipated to drop by 3.5% in next year's fourth quarter to $1,147,868, with condos projected to decline by 3% to $712,853, the Royal LePage report said.
With sales considerably below the 10-year average, inventory is mounting as homes sit on the market longer. The report said the current soft fall market is likely indicative of what 2026 has in store.
“When we look at why buyers are hesitating, two groups stand out: those concerned about the broader economy, and those trying to time the market for a better deal,” said Randy Ryalls, managing broker of Royal LePage Sterling Realty. “With plenty of inventory available and prices edging downward, there is little urgency for buyers to move quickly. In this environment, many feel comfortable waiting, watching and weighing their options before making a decision.”
Move-up buyers, too, are stuck in a “chicken and egg” situation because they’re having trouble securing buyers for their current homes. The report surmises that another interest rate cut or two by the Bank of Canada may be needed to spark renewed home sales, but acknowledged that is unlikely to happen.