Real Estate Predictions: What We Expect in 2026

Another year is behind us, and as always, it’s a good time to assess what has happened during the last 12 months. In terms of Toronto real estate, there have definitely been some triumphs, as well as several challenges.

What will happen next? None of us has a crystal ball, but if we did, here are some of our real estate predictions for 2026.

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A Decrease in the Average Selling Price

The last two years have been challenging for sellers, since so many buyers have been sitting on the sidelines for so long. As a result, the average selling price of a house has dropped slightly, a trend we think will continue, at least for the first several months of the year.

The Toronto Regional Real Estate Board has talked of growing inventory and weakened demand for many months. This excess supply isn’t likely to dwindle anytime soon, so it’s not unreasonable to expect average prices to come down even further.

There is a caveat, however. Some housing structures are more vulnerable to these fluctuations than others. Single-family homes have remained in high demand, and values have been more resilient. Some well-maintained houses in desirable areas have actually seen slight increases in value. We suspect that this trend will continue for the foreseeable future as more people turn their eyes to this world-class city.

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The Condo Market Will Remain Slow

The condo market has not been quite so lucky. This structure has been a weak point in the local market for quite some time. In fact, when you hear the news that housing prices are decreasing, it’s mostly condo values bringing the averages down.

No segment of the Toronto real estate market has been hit harder, and unfortunately, we do not see this changing in 2026. If anything, demand for condos, especially in high-rises, will continue to decline for a few reasons.

It isn’t just that many young condo owners are on the hunt for larger homes and more space. Investors are also trying to offload their units due to high carrying costs, reduced demand from tenants, and lower potential income per holding.

This combination has resulted in a vast surplus of supply. With fewer buyers in the market, selling in 2026 might be particularly challenging. For buyers, the outlook is far more positive. There are numerous listings to choose from and little competition from other hopefuls.

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Interest Rates Will Stabilize

A few years ago, Canadians enjoyed historically low interest rates in an attempt to spur slow spending brought on by the pandemic. In retrospect, we might define this as a severe overcorrection, as it caused unprecedented activity in the real estate market.

Once the Bank of Canada began to increase rates, sales activity all but dropped off the map. As inflation cooled, buyers slowly and cautiously resumed their plans. Regardless, the damage was done, and this uncertainty took its toll on buyers and sellers all over Toronto.

Fortunately, we expect that interest rates will become more stable for at least most of 2026. Greater stability could be excellent news for buyers and sellers alike. If we are correct, buyers should soon feel a little more confident about their decisions, and many homeowners will likely see renewed interest in their listings.

The Volume of Sales Will Increase

Both 2024 and 2025 were marked by fewer transactions and falling prices. In 2026, prices are not likely to increase substantially for most housing structures. As we mentioned, single-family home values will probably hold steady or possibly enjoy slight increases, while condo prices continue to decrease.

One thing we feel quite sure of is that we will see more transactions this year. The dollar amounts may be lower, but we predict that more people will jump back into the market and begin buying once again.

Why do we believe this? Think of all of the people who have wanted to buy a house in the past but have put their plans on hold. They might be hesitating due to economic uncertainty and trade tensions with our southern neighbour.

However, the demand for housing has not disappeared. There are just more potential buyers holding off and waiting for the right moment. When selling, your goal is to price and prepare your home in a way that inspires them to make an offer.

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Moving Forward With Cautious Optimism

Due to the built-up inventory, it will take some time before buyer activity puts upward pressure on prices. We fully expect prices to increase at some point in the future. That said, it may not happen in 2026.

Nevertheless, you don’t need to wait for the stars to align before moving forward with your next steps. With expert guidance and a little patience, both buyers and sellers can find opportunities right now, even in the midst of an unpredictable market.

When you’re buying or selling a home, our Toronto luxury real estate agents can help you achieve the best outcome possible. Reach out to ana@asantos.ca or call us at 416.575.7317 to take the next steps.