Canadian Real Estate Outlook 2026: A Strategic Transition Toward Market Rebalancing

The Global and Macroeconomic Landscape: Redefining the "Neutral" State

The dawn of 2026 marks a pivotal chapter in the narrative of Canadian real estate, one defined less by the frantic pace of the early 2020s and more by a sophisticated, albeit cautious, re-alignment of fundamental value. As observed in the preceding year, the housing market in both Metro Vancouver and the Greater Toronto Area (GTA) has been profoundly influenced by forces originating well beyond provincial borders. The macroeconomic backdrop of 2025 was dominated by geopolitical uncertainty, specifically around trade relations with the United States, which manifested in volatile bond yields and suppressed consumer sentiment. These external shocks imparted a drag on the economy that necessitated a departure from standard forecasting models.

By early 2026, a clearer narrative has emerged, though one still characterized by structural adjustment. The Canadian economy is navigating a period of modest expansion, with real gross domestic product (GDP) growth projected to remain near 1.1% to 1.3%. This subdued growth is a direct consequence of slowing population inflows and the ongoing reconfiguration of international trade routes. However, within this broader slowdown lies a strengthening per-capita GDP backdrop, suggesting that while the "top-line" growth is cooling, the individual economic health of households may be stabilizing as the labor market finds a new equilibrium.

Central to this stability is the Bank of Canada’s monetary policy trajectory. After a series of calibrated rate cuts in 2025, the policy interest rate has settled at 2.25%—the lower bound of the central bank's self-defined "neutral" range. This positioning signals that the period of restrictive monetary policy has concluded, yet it does not imply a return to the stimulative, near-zero rates of the pandemic era. The bank's current stance is aimed at maintaining inflation near the 2.0% target while allowing the economy to work through excess supply. For real estate stakeholders, this predictability in the cost of capital is perhaps the most significant development for 2026, providing a stable floor for both development financing and mortgage planning.

Macroeconomic Indicator	2025 Actual (Estimated)	2026 Forecast (Consensus)	Impact on Real Estate
Real GDP Growth	1.2%	1.1% - 1.3%	Subdued but stable demand
Consumer Price Index (CPI)	2.5%	2.1% - 2.3%	Predictable pricing for construction and services
Bank of Canada Policy Rate	2.25% (at year-end)	2.25% (Hold)	Stability in borrowing costs; neutral policy stance
5-Year GoC Bond Yield	2.93% - 3.10%	2.80% - 3.00%	Sideways pressure on fixed mortgage rates
Unemployment Rate	7.1%	6.5% - 7.1%	Cautious consumer sentiment; labor market slack

The interaction between inflation and bond yields remains a critical mechanism to monitor. While core inflation measures have eased toward the 2.5% range, they remain "stubbornly" above the 2.0% headline target. This persistent core inflation, driven by components such as auto insurance, cell phone prices, and housing costs, suggests that the Bank of Canada will remain on the sidelines for the duration of 2026, resisting further cuts unless a significant economic contraction occurs.

Consequently, 5-year fixed mortgage rates are expected to fluctuate between 3.90% and 4.40%, providing a more accessible environment for buyers than the 5%+ rates seen in 2024, but requiring a disciplined approach to qualification.

Metro Vancouver: Resilience and the Expansion of Choice

The Metro Vancouver housing market enters 2026 following a year that tested the resilience of even the most seasoned market participants. In 2025, the region experienced a more-than-two-decade low in sales transactions, totaling just over 35,000 units.  We characterizes the current state as one of "increased purchasing power and options," where the primary challenge is no longer a lack of inventory, but rather the cautiousness of a labor market still finding its footing.

The Resale Market: A Measured Recovery

For 2026, the Vancouver region is projected to see a 12,000-unit sales volume for detached homes and a 16,000-unit volume for condominiums, contributing to a total regional sales forecast of 38,000 MLS units—an 8% increase from the 2025 nadir. This recovery is supported by the normalization of inventory levels, which reached a decade-high in 2025. Buyers in 2026 are finding themselves in a rare position of leverage, where the combination of lower interest rates and a vast selection of active listings allows for more thorough due diligence and negotiation.

However, this increase in sales volume does not immediately translate into price appreciation. In fact, benchmark prices for both detached homes and condos are predicted to soften further in 2026, with anticipated decreases of 4.7% and 4.4% respectively.  This continued softening is a direct result of the supply-demand imbalance created by record-high completions hitting the market at a time when population growth has shifted into a contractionary phase.

Vancouver Market Segment	2026 Sales Forecast	2026 Price Growth Forecast	Inventory Outlook
Detached Homes	12,000 units	-4.7%	High; buyers favoring move-in readiness
Townhomes	10,000 units	-4.5%	Balanced; steady demand from families
Condominiums	16,000 units	-4.4%	Elevated; significant new-build absorption needed
Total Regional (MLS)	38,000 units	-4.5% (Average)	Balanced to Buyer-Favored

The detached home segment, particularly in the $1.75M to $2.5M range, is currently described as being in a "demand no-man's land". These properties are often too expensive for first-time buyers and lack the "ultra-luxury" cachet required for the top-tier investor. For owners of such assets, the strategy in 2026 must involve meticulous presentation and competitive pricing to stand out in a crowded resale field.

New Home Sales and the Supply Pipeline

The new-home market in Metro Vancouver has evolved to a point where "pre-sale" is no longer the dominant descriptor. In 2025, fewer than 6,000 new home sales were registered—a 15-year low—and only one-third of those were true pre-construction sales. The current year expects a modest uptick to 6,300 new home sales, largely driven by the absorption of existing inventory in projects that have already commenced or completed construction.

Developers are recalibrating their pipelines in response to high construction costs and the "diminished viability" of large residential towers. The few new launches occurring in 2026 are expected to skew heavily toward smaller-scale woodframe and townhome projects. This shift is reflected in housing starts, which are projected to decline by 15% in 2026 to approximately 23,100 units. This reduction in starts, while necessary for near-term stabilization, sets the stage for a potential supply crunch in the late 2020s as the current pipeline of "bought but not built" homes is exhausted.

The Rental Market: Supply Absorption and Rate Moderation

The rental housing sector in Metro Vancouver is experiencing a significant "renaissance" in supply, but one that coincides with a cooling demand profile. The purpose-built vacancy rate increased from under 1% in 2023 to 3.7% in 2025—the highest level in available data since 1990. This surge in vacancy is the result of a record-setting delivery of new units (over 30,000 completions in 2025) coupled with the federal government's policy to reduce the number of non-permanent residents.

In 2026, rental deliveries are expected to remain elevated at approximately 5,400 purpose-built market rental units, the second-highest total on record. With the regional population projected to contract by 10,000 people this year, the rental market will continue to soften, with regional per-square-foot rents predicted to fall by up to 4.8%. For investors in secondary rental stock (investor-owned condos), this means a more competitive environment where tenant retention and professional property management are paramount.

The Greater Toronto Area: A Tale of Two Markets

The Greater Toronto Area (GTA) enters 2026 facing a paradoxical landscape where the resale market is stabilizing while the new-build sector continues to grapple with a historic collapse in activity. In 2025, GTA home sales declined by 11.2% year-over-year, yet the most alarming statistic originated from the Building Industry and Land Development Association (BILD), which reported the worst year for new home sales in 45 years—with just 5,314 units sold.

Resale Stabilization and Buyer Empowerment

The resale market in the GTA is expected to remain relatively stable in 2026. The Toronto Regional Real Estate Board (TRREB) forecasts sales volume in the range of 60,000 to 70,000 transactions, with average prices expected to fluctuate between $1 million and $1.03 million. The current market is defined by "improved buyer choice and affordability," though tempered by cautious consumer sentiment.

Data from January 2026 reveals an average selling price of $973,289, down 6.5% compared to January 2025. While prices have softened, the decline is not viewed as a crash but rather a healthy correction from the unsustainable peaks of 2022. The market currently holds about 5.5 months of inventory, positioning the GTA firmly in a "buyer's market" where sellers must be flexible and strategic.

GTA Resale Indicator	2025 Actual	2026 Forecast	YoY Change (%)
Total Sales Volume	62,433	60,000 - 70,000	+5% (Estimated)
Average Home Price	$1,067,968	$1,000,000 - $1,030,000	-3% to -5%
Detached Home Avg.	$1,380,000	$1,350,000 - $1,400,000	Stable to Soft
Condo Apartment Avg.	$680,000	$610,000 - $630,000	-6.5%
New Listings	186,753	Balanced	+10% (Expected)

For families looking to "trade up" or first-time buyers seeking attainable options, 2026 offers a window of opportunity that has not existed in over a decade. The prevalence of conditional offers and the return of home inspections signal a more rational, balanced environment where decisions are made based on value rather than desperation.¹³

The Crisis in the New Home Sector

While the resale market adapts, the new-build condominium market is undergoing what Urbanation calls its "largest ever correction". New condo sales in the GTHA fell for the fourth consecutive year in 2025, reaching their lowest annual total since 1991. Only 22% of units in newly launched projects were sold last year, a stark contrast to the 81% sales rate recorded in 2021.¹⁹

This stagnation is having profound implications for the future supply of the region. Condominium starts have dropped by 88% over the past three years, resulting in a 10-year low for total inventory under construction. The consequence of this "buying but not building" phase is a projected "supply cliff" at the end of the decade. Completions are expected to fall from over 29,000 units in 2025 to just 14,000 in 2027, and by 2029, virtually no new condos are expected to be delivered in the GTHA.

For investors, this supply-demand gap represents a compelling long-term thesis. While current rents and prices are soft, the total absence of new inventory in three to four years suggests that property values and rents could "skyrocket" as demand eventually recovers. The strategic move for 2026 is to identify and acquire high-quality assets today while they are priced at what many analysts believe is the market floor.

Demographics: The Federal "Mulligan" and Its Ripple Effects

Demographic change is the primary engine of long-term real estate demand, and in 2026, that engine is undergoing a fundamental recalibration. The federal government’s policy aim of reducing the share of non-permanent residents (NPRs) from its peak of 7.6% to 5% by the end of 2027 is the most influential factor currently shaping the Canadian housing market.

The Shift in Migration Patterns

This policy pivot requires a net reduction of more than half a million NPRs over the next two years. For major urban centers like Vancouver and Toronto, the consequences are immediate. Metro Vancouver is projected to see its population contract for a second consecutive year, driven by net outflows of NPRs and intraprovincial migrants seeking more affordable locales like the Fraser Valley or the Interior.

Nationally, the permanent resident target remains stable at approximately 380,000 per year through 2028. While this ensures a steady baseline of new homeowners over the long term, the immediate reduction in temporary residents—who are overwhelmingly renters—is creating a temporary surplus in the rental market.

Long-Term Demand and the "Echo" Effect

Despite the short-term contraction, the underlying fundamentals for housing demand remain intact. Canada is witnessing its largest-ever intergenerational wealth transfer, with an estimated $740 billion shifting to younger Canadians. This transfer is a powerful catalyst for first-time buyers in luxury and high-end markets.

Furthermore, the "missing middle" demographic—families in their 30s and 40s and downsizers in their 60s—is becoming the dominant driver of demand. These groups are moving away from small, investor-focused condos toward larger units with ground orientation, such as townhomes and mid-rise developments. This structural shift suggests that developers who prioritize family-sized housing and community-centric design will be the best-positioned for the remainder of the decade.

The inCAN Strategic Perspectives:

In recent years, Vancouver and Toronto have often been portrayed in headlines as markets that have “lagged” newer or faster-moving regions. This interpretation, while attention‑grabbing, overlooks the structural reality of Canada’s two global gateway cities.

Vancouver and Toronto are not trend‑driven markets. They are fundamentals‑driven markets. Their value lies not in short‑term momentum, but in depth—of capital, talent, infrastructure, and economic diversification.

Two Global Gateways, One National Growth Strategy

Vancouver and Toronto anchor Canada’s economic connectivity to the world, each through distinct but complementary engines. Vancouver functions as Canada’s Pacific gateway, deeply integrated with Asia‑Pacific trade, clean technology, life sciences, digital media, and advanced manufacturing. Toronto serves as the nation’s financial, institutional, and innovation capital, home to global banking, artificial intelligence research, healthcare, fintech, and higher education.

Neither city depends on a single industry or demographic driver. Both have demonstrated an ability to pivot, recalibrate, and diversify as global conditions change. This adaptability is precisely what has allowed these markets to remain resilient through multiple economic cycles.

Periods of recalibration should not be mistaken for weakness. In mature, globally connected cities, recalibration is how long‑term value is preserved.

The Strategic Advantage of Being Active in Both Markets

For inCAN Developments, operating meaningfully in both Vancouver and Toronto is not about geographic expansion for its own sake. It is a deliberate strategy that enhances resilience and long‑term performance.

A dual‑market presence allows us to:

• Diversify exposure across two distinct economic engines

• Transfer best‑in‑class design, construction, and customization practices between regions

• Maintain continuity in project pipelines across market cycles

• Anticipate demographic, policy, and capital‑flow shifts earlier through broader market intelligence

This approach reduces reliance on any single cycle and reinforces our ability to execute consistently, regardless of short‑term volatility.

Playing the Long Game: Beyond Headlines and Sensationalism

Real estate cycles are often dominated by narrative swings—what is popular, what is feared, what is temporarily in focus. At inCAN, we do not build for headlines or hype cycles. We build for longevity.

Our investment philosophy is grounded in three constants:

• Investing in quality that compounds over time

• Investing in locations that remain relevant across generations

• Investing with discipline, patience, and conviction

Markets move. Fundamentals endure.

History has consistently shown that those who commit to well‑located, well‑designed assets in global cities during moments of uncertainty are the ones who benefit most over the long term.

Investing in Canada, With Conviction

Beyond market mechanics, Vancouver and Toronto reflect something deeper: Canada’s long‑term confidence in itself. Despite policy adjustments, demographic recalibration, and economic transitions, Canada remains politically stable, institutionally trusted, and globally attractive to both capital and talent.

At inCAN, we remain steadfast in our belief that investing in Canada—and in Canadians—is a long‑term winning strategy.

The Investment Case for 2026: Strategy Over Speculation

Investing in real estate in 2026 requires a departure from the "get-rich-quick" schemes of the previous decade. The current environment favors the "Wealth Builder"—the investor who focuses on quality at a reasonable price, cash flow stability, and long-term legacy planning.

The "First Mover" Advantage

History shows that the most strategic opportunities often present themselves during periods of market adjustment. The 2026 housing market is characterized by a "renewed balance" that signals healthier conditions and provides buyers with a wider range of opportunities. By acting early in the current cycle, buyers can capitalize on a "first-mover advantage," securing better deals and better selection before the supply cliff of 2028-2029 triggers renewed competition and price spikes. Especially, with preconstruction projects, buyers could take advance of current buyer market benefits and expect stabilization and growth in the coming years.

Synthesis: Navigating Toward 2026

The 2026 outlook underscores a defining shift in the Canadian real estate landscape. This is no longer a market driven by speculation or speed. It is a market that rewards strategy, patience, and long‑term thinking.

Vancouver and Toronto are not shaped by short‑term sentiment, but by their ability to absorb change, reinvent their economic foundations, and sustain demand over generations. For those willing to look beyond the noise, today’s environment offers an opportunity to secure high‑quality assets in irreplaceable locations—before the next structural upswing takes hold.

For inCAN Developments, our presence in both markets is intentional. It reflects a belief in craftsmanship over commoditization, integration over isolation, and enduring value over momentary momentum.

Whether on Vancouver’s West Side or within the evolving growth corridors of the Greater Toronto Area, our commitment remains unchanged: to create homes that stand the test of time—architecturally, financially, and culturally.

In a world increasingly focused on immediacy, inCAN continues to take the long view. Because quality lasts. Because great cities endure. And because Canada’s best chapters are still ahead.