Ontario Real Estate Market Outlook 2026

For the past five years, the Ontario real estate market has been a story of violent extremes. We went from the pandemic-fueled frenzy of 2021 to the brutal interest rate shock of 2023, followed by the "Great Cooldown" of 2024 and 2025. This period, which we are just now emerging from at the end of 2025, has been defined by a deep and pervasive sense of hesitation.

Sidelined buyers and hesitant sellers have been locked in a staring contest, all watching the Bank of Canada for their next move.

Now, as we look to 2026, the data shows that this stalemate is about to break. But the market that emerges will look nothing like the one we left behind in 2022. The frenzied bidding wars and 30% year-over-year price gains are not coming back.

Instead, the data points to a profound "Great Rebalancing."

The outlook for 2026 is not a simple rebound; it's a complex and fundamental shift. For the first time in over a decade, the market is tilting away from sellers, and a new set of data-driven forces—from stable interest rates to historic changes in immigration policy—is setting the stage for a market defined by two words: choice and stability.

This data-driven forecast will explore the powerful forces that have brought us to this point and what they mean for the market ahead.

2025 in Review: The Data Behind the "Big Tilt"

To understand where we are going, we must be crystal clear about where we are. As of November 2025, the market is not just "cool"; it has fundamentally tilted. The data from 2024 and 2025 tells the story of how the power unequivocally shifted from sellers to buyers.

Key Data Point: Inventory Skyrockets to 15-Year High

For years, the number one story in Ontario real estate was the "supply crisis." That narrative has been completely rewritten.

According to the Ontario Real Estate Association (OREA), active residential listings at the end of September 2025 were at their highest level in more than 15 years. Province-wide, inventory sat 45.1% above the five-year average and a staggering 50.1% above the 10-year average.

This surge in supply—a combination of sellers who could no longer wait and a dip in sales activity—has been the single most important market driver.

Key Data Point: The Shift to a Buyer's Market

With a flood of listings and buyers hampered by high borrowing costs, the market balance has definitively tipped. The most crucial metrics to watch are the Sales-to-New-Listings Ratio (SNLR) and Months of Inventory (MOI).

An SNLR between 40% and 60% is a balanced market. Below 40% is a buyer's market.

The long-run average for MOI in Ontario is 3.1 months.

Here is where we stood in the fall of 2025:

Ontario: MOI sat at 5.2 months, far above the long-run average.

Hamilton: The SNLR in September 2025 was 35%, deep in buyer's market territory.

London: The SNLR was even lower at 31%, with 6 months of inventory on the market.

Ottawa: A historically stable market, Ottawa saw its SNLR drop to 38% in September, officially tipping into a buyer's market.

Greater Toronto Area: The TRREB October 2025 report confirmed the trend, with sales down 9.5% year-over-year while new listings rose.

Key Data Point: Prices Reflect the New Reality

This combination of high supply and reduced demand has had a predictable and necessary effect on prices, bringing them down from their unsustainable 2022 peaks.

Province-Wide: The OREA average home price in September 2025 was $828,896, a 2.9% decrease year-over-year.

Greater Toronto Area: The TRREB benchmark HPI was down approximately 5% year-over-year in October 2025, with the average selling price at $1,054,372.

Hamilton: This market saw one of the sharpest corrections, with the average price in September 2025 at $753,300, a 9.4% drop from the previous year.

This data is not a sign of a crash; it is the sign of a correction. The market has spent the last 18 months letting the air out of the bubble, creating a stable, lower-price foundation from which to build for 2026.

The Macro-Drivers of 2026

With the market rebalanced, what forces will shape its next move? We are tracking three primary data-driven drivers that will define the 2026 outlook.

Driver 1: The "Green Light" — Interest Rate Stability

The single biggest force that froze the market was not just high rates, but rate uncertainty. Throughout 2023 and 2024, buyers had no idea where the Bank of Canada (BoC) would stop.

That uncertainty is now over.

The BoC's actions in late 2025—cutting the policy rate in both September and October to its current 2.25%—have signaled the end of the hiking cycle. According to the Bank's own October report, with inflation hovering around 2.4% (and underlying inflation at 2.5%), their policy is now focused on supporting a slowing economy.

Economic forecasts from Trading Economics and True North Mortgage project that the overnight rate will hold steady in the 2.25% to 2.50% range throughout 2026.

This is the "green light" the market has been waiting for.

The Psychological Barrier is Gone: Sidelined buyers no longer have to fear that the rate they are quoted today will be gone tomorrow.

Affordability Gets a Stable Baseline: While affordability remains the single biggest challenge, it is now a stable and predictable challenge. Buyers can finally budget with confidence.

The Stress Test Eases: The OSFI stress test (qualifying at the contract rate + 2%) becomes easier to pass as variable rates become more attractive and fixed rates remain stable.

Driver 2: The "New Normal" — Shifting Population & Demand

For a decade, the Ontario real estate narrative was simple: a tidal wave of demand from record population growth smashing into a wall of low supply.

In November 2025, this narrative changed overnight.

The federal government announced a historic shift in immigration policy for 2026-2028. While permanent resident (PR) targets are being stabilized at 380,000 per year (down from 395,000 in 2025), the major move is a deep cut to temporary residents.

International Student Arrivals: Cut by 49%.

Temporary Foreign Worker Arrivals: Cut by 37%.

This is a deliberate policy to cool housing demand. TD Economics and CMHC have both noted this will hit the rental market in Ontario and BC the hardest. This, in turn, will dramatically reduce investor demand for pre-construction and resale condominiums, a sector that has been a major price driver in the GTA.

To be clear, this does not mean demand is disappearing. As Central 1 notes, the "bulge" of demand from the record-high population growth of 2022-2024 is still here. But for the first time, the accelerant has been removed.

Driver #3: The "Stable Floor" — A Softer, But Not Broken, Labour Market

The final piece of the puzzle is the job market. A full-blown market crash, like the U.S. saw in 2008, is almost always driven by mass layoffs and forced sales. The 2026 data shows this is simply not in the cards.

Data from mid-2025 showed Ontario's unemployment rate at 7.8%. While this is significantly up from the unsustainable lows of 5.0% in 2023, it is only slightly higher than the long-term historical average of 7.4%.

This is a softening, not a collapse. It's a sign of an economy that has moved from red-hot to a more balanced, normal state. CMHC's outlook projects that after peaking in 2025, the unemployment rate will actually begin to improve in 2026.

This data provides a "stable floor" for the housing market. It prevents the widespread, distressed selling that would be required for a price freefall, ensuring the 2026 market will be one of negotiation, not desperation.

2026 Forecast: What the Data Projects

Do not make the mistake of grouping sales and prices together. The data for 2026 points to a dramatic split: a rebound in activity but a continued stagnation in price. This is the central theme of the rebalanced market.

Sales Volume: The Rebound in Activity

Pent-up demand is real. The buyers who sat on the sidelines in 2024 and 2025 did not disappear; they were just waiting for stability. With the Bank of Canada’s overnight rate stabilizing around 2.25% - 2.50%, that stability is finally here.

The Data: The Canadian Real Estate Association (CREA) forecasts that national home sales will climb by 4.5% in 2026.

The "Why": This rebound will be led by provinces like Ontario and British Columbia, which saw the most significant drops in activity during the freeze. This 4.5% climb represents a "return to normal" sales volume, moving closer to the 10-year average. It is a sign of a functioning, healthy market, not a speculative boom.

Home Prices: The Sobering News for Ontario

This is the most critical takeaway for 2026: A rebound in sales will not mean a rebound in prices.

Why? Because the 15-year high in inventory will easily absorb all this new, returning demand.

For the first time in a decade, buyers will not have to fight over a handful of listings. This single structural change—more supply than demand—will keep a hard ceiling on price growth.

The major economic forecasters are aligned on this:

The RBC Data: An RBC Economics report states that the large inventory overhang in Ontario will "keep prices under pressure." Their official forecast for 2026 is a provincial price decline of 1.4%.

The TD Data: TD Economics echoes this, projecting that "price growth is likely to stay weak through much of 2026" for Ontario, as the market struggles to digest the high inventory.

The CMHC Data: The Canada Mortgage and Housing Corporation's long-term forecast is even more sober. It projects that any price growth in the GTA will "remain in the single-digit range" and only gradually return to its pre-pandemic average by 2027.

In short, the 2026 story for sellers is that they will have more interested buyers, but they will not have more pricing power.

Regional Deep Dive: A Tale of Three Ontarios

The "Ontario market" is not a monolith. The data shows three distinct micro-climates emerging, each with its own set of rules for 2026.

1. The GTA Core & Condo Market

This segment will face the most significant headwinds. The policy changes to international student and temporary resident admissions directly target the rental market, which is the primary driver of investor demand for condos.

The Data: CMHC and TD forecasts are explicit: the pullback in non-permanent resident admissions will cool the rental market, which in turn "will likely face continued downward pressure" on prices for smaller, investor-held units in 2026.

The Outlook: This will be the softest segment of the entire Ontario market. Sellers of one-bedroom and junior-bedroom condos will be competing not only with high inventory but also with a shrinking pool of investor buyers.

2. The 905 & Detached Family Homes

This market—detached and semi-detached homes in established, family-oriented communities in the 905 (York, Peel, Durham, Halton)—will be the most resilient.

The Data: This demand is not speculative. It is driven by a stable, local demographic: Millennials (now in their mid-30s to early 40s) forming families and needing more space. This "move-up" demand is less sensitive to immigration policy and more sensitive to interest rate stability.

The Outlook: While prices won't soar, this segment will be solid. The 9.4% price drop seen in places like Hamilton-Burlington (Sept 2025) has already happened. We project this segment will see prices remain flat to very modestly positive (+0.5% to +1.5%) in 2026, as stable demand meets high inventory.

3. London, Windsor, and Hamilton

These markets saw the most extreme volatility, with massive 100%+ gains in the pandemic followed by sharp corrections. In 2026, their performance will be tied directly to local economics.

The Data: Local job growth will be the key differentiator. Windsor, with its EV battery plant, may outperform. London, with its SNLR in the deep buyer's territory of 31%, will remain highly competitive for sellers.

The Outlook: These markets will see a significant rebound in activity from first-time buyers who are permanently priced out of the GTA. However, the sheer volume of inventory will keep prices flat. This will be a high-volume, low-price-growth market.

The New Playbook: Strategies for a Rebalanced Market

The old rules are gone. Success in 2026 requires a new playbook.

For Buyers in 2026:

This is your market. For the first time in years, you have the two things you've been denied: choice and time.

Your New Superpower: Negotiation. The days of 20-offer bidding wars and unconditional "bully" offers are over. Your strategy is to negotiate.

Conditions are Back: Your offer should be conditional on financing. It should be conditional on a home inspection. This is now the standard, and sellers with 50+ days on the market will be forced to accept.

Your Hurdle is Affordability: Your main challenge is not competition; it's the high monthly payment. Even with stable rates, affordability is at a historic low. This makes your financing strategy the single most important part of your purchase.

For Sellers in 2026:

Your mindset must shift from "passive" (listing a home and waiting for offers) to "active" (competing for a buyer).

Your New Hurdle: Competition. You are not the only house for sale. You are competing against a 15-year high in inventory.

Price to Sell, Not to Test: If you price your home 10% above the market "just to see," buyers will not even book a showing. The data shows that homes priced correctly from Day 1 sell faster and for more money than homes that chase the market down with price reductions.

Condition is King: With so much choice, buyers will simply ignore "fixer-uppers." Homes that are staged, freshly painted, and have a pre-listing home inspection report available will capture the limited buyer pool. You must be the best-looking product on the shelf.

Your Strategic Partner in the New Normal

In the chaos of 2021, any mortgage worked. In the rebalanced market of 2026, only the right mortgage strategy will get you to the finish line.

The greatest hurdle for buyers in 2026 is affordability. This is where a mortgage broker in Ontario becomes your most critical asset.

A bank can only offer you their products. A broker, on the other hand, is a strategist. In this new market, their job is to:

Solve for Affordability: A broker can shop the entire market—dozens of lenders, including banks, credit unions, and monoline lenders—to find the one or two that have the best rate and the most favorable qualifying rules, getting you a "yes" when your bank might have said "no."

Build a "Bulletproof" Offer: A broker can provide a "fully underwritten" pre-approval, which gives your conditional offer the same strength as a cash offer and allows you to negotiate from a position of power.

Navigate Complexity: In a rebalanced market, buyers have more complex incomes (gig work, self-employed) and sellers may need bridge financing. A broker has access to the alternative (B-Lender) and private markets to build solutions that traditional banks won't touch.

Ontario Real Estate Market Outlook 2026

The 2026 Ontario real estate market will not be a crash, and it will not be a boom. It is a return to normal.

It will be a market defined by fundamentals, not speculation. A market where buyers can take their time and sellers must compete on value. The "Great Rebalancing" will be frustrating for sellers stuck in the 2021 mindset, but it will be a welcome relief for buyers who have been waiting for their chance.

This new market will be healthier, more sustainable, and built on data and patience, not hype and FOMO. Success in 2026 will be defined by professional strategy and a clear-eyed understanding of this new, balanced reality.

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