Ontario’s housing market is expected to remain under pressure in 2026, with some experts warning that prices could fall further before stabilizing, following two years of significant declines.
Home prices across the province, particularly in the Greater Toronto Area (GTA), have dropped sharply since peaking in 2021. Data from the Toronto Regional Real Estate Board show prices in the GTA fell 6.4 per cent over the past year, while new home sales reached a multi-decade low in 2025.
Several real estate firms are forecasting modest price increases in parts of Canada next year, but Ontario and British Columbia are largely excluded from those projections. According to Royal LePage’s 2026 market outlook, prices in the Toronto region are expected to decline by 4.5 per cent year over year, while Vancouver-area prices could fall by 3.5 per cent.
Rob Butler, an Ontario-based mortgage broker, said he expects conditions to deteriorate further before improving.
Butler cited several factors weighing on the market, including rising unemployment concerns, reduced international student numbers, trade tensions between Canada and the United States, and a wave of mortgage renewals scheduled for 2025 and 2026.
While Canada added 54,000 jobs last month — the third consecutive monthly increase — Statistics Canada reported that most of the growth came from part-time positions, with full-time employment lagging.
A recent Bank of Canada report estimates that roughly 60 per cent of mortgage holders will face higher monthly payments as their loans renew over the next two years. Many homeowners who locked in five-year fixed rates in 2021 at around 1.5 per cent will renew at rates closer to four per cent.
“That’s a significant payment increase,” Butler said, noting that homeowners with multiple properties could face particular strain.
According to Nesto Mortgage Experts, the average selling price of a home in Ontario declined 5.2 per cent year over year in November 2025. Single-family homes fell 4.9 per cent, townhomes dropped 6.6 per cent and condominiums declined seven per cent.
“With all these factors, I would bet there is no price recovery in 2026,” Butler said, adding that he does not expect conditions to level off until 2027.
Victor Couture, an associate professor of economic analysis and policy at the University of Toronto, said further price declines are likely, though the scale remains uncertain.
“In a downturn like this, you’d expect it to keep dragging,” Couture said. “It’s impossible to predict when the market will turn.”
Couture emphasized that Ontario is not currently experiencing a housing crash, but without strong population growth, very low interest rates or robust economic expansion, significant price increases are unlikely. He said the downturn is forcing a reset in expectations around housing.
“The path to wealth shouldn’t be to buy property,” Couture said. “It would be better for Canada if people didn’t think of housing as an investment, but rather a place to live.”
For prospective buyers planning to stay in a home for five to 10 years, Couture said conditions are more favourable than they have been in years, though he cautioned against rushing into a purchase.
“If someone has the ability to wait, it could be worth watching the market a few more months,” he said.
Butler offered similar advice, urging buyers without immediate pressure to delay major decisions.
“Nobody should buy right now unless they have to,” he said. “If you’re a first-time buyer with no urgency, wait until May or June and see how the market performs.”
Not all analysts share a bleak outlook. Kari Norman, an economist with Desjardins, said she expects Ontario’s housing market to stabilize in 2026, with gradual price increases later in the year.
“We expect it to gradually increase over the next year,” Norman said, noting that elevated inventory levels in Toronto could limit upward price pressure in the near term. “Any stronger pressure on prices would likely come toward the middle or end of next year.”
Taken together, experts say 2026 is shaping up as another challenging year for Ontario’s housing market, marked by cautious buyers, affordability pressures and a slow path toward recovery.