‘It’s going to get worse in Ontario:’ Here’s what experts predict will happen to the housing market in 2026

A real estate sign is displayed in front of a house in Toronto on Wednesday, September 29, 2021. THE CANADIAN PRESS/Evan Buhler

Ontario home prices fell significantly over the past two years and some experts are advising prospective home buyers to sit tight and watch as further drops are expected in 2026.

While some real estate firms are predicting slight rises in home prices in major markets across the country this coming year, several cities in Ontario and British Columbia are not included in those hopeful predictions.

The gloomy outlook comes following a year that saw home prices decline by 6.4 per cent in the GTA, according to data from the Toronto Region Real Estate Board.

New home sales in the GTA also reached a multi-decade low in 2025.

“The one thing for sure is that it’s going to get worse in Ontario. There is no possibility of better,” Ron Butler, an Ontario-based mortgage broker, told CTV News Toronto. “Thinking otherwise, it’s entirely based on hopium.”

Royal LePage released its 2026 market outlook in December saying home prices are expected to rise in several major markets across the country in 2026, but the real estate firm painted a gloomy picture for Vancouver and Toronto regions, Canada’s two most expensive markets, where prices are expected to fall 3.5 per cent and 4.5 per cent respectively, year-over-year.

Butler said he expects things will get worse in 2026, and things won’t start to level off until 2027. He cites unemployment, lack of international students, tensions between Canada and the U.S. and upcoming mortgage renewals as reasons for his predictions.

Canada created just 8,200 net new ​jobs in December, pushing the unemployment rate to 6.8 per cent, Statistics Canada said Friday.

Butler said that roughly 60 per cent of Canadian mortgage holders will face higher monthly payments when their loans come up for renewal in 2025 and 2026, according to a new Bank of Canada report.

“Anyone who got a five-year fixed rate in 2021 averaged about 1.47 per cent and that’s all going to turn into a number around four per cent. That’s a significant payment increase and those that had more than one property, that’s hard to manage,” Butler said.

The average selling price of a home in Ontario decreased by 5.2 per cent year-over-year in November 2025, with single homes decreasing by 4.9 per cent, townhomes decreasing by 6.6 per cent and condos decreasing by seven per cent, according to Nesto Mortgage Experts.

“With all these factors, I will bet anyone that there is no price recovery in 2026,” he said.

Victor Couture, associate professor of economic analysis and policy at the University of Toronto, told CTV News Toronto, that it’s likely home prices will continue to decline next year, but he said it’s impossible to predict by how much.

“In a downturn like this you’d expect it to keep dragging and that the drop this year will be somewhat less than last year. It’s impossible to predict when the market will turn,” he said.

He said that while we are not currently in a “housing crash,” without rapid population growth, very low interest rates or strong economic growth, home prices are not expected to rise significantly or at all.

Couture added that the housing situation in Ontario is resetting people’s expectations.

“The path to wealth shouldn’t be to buy property, but that’s the mindset that’s been fed to people for so long,” Couture said. “It would be better for Canada if people didn’t think of housing as investment but rather a place to live. it’s very hard to imagine that over the next few years you’ll see the kind of house price rises that people have been experiencing over the last decade.”

For people looking to enter the housing market, Couture said it’s a good time to purchase a home.

“If you think of a home as an investment, you may have wait a long time before houses are again a good investment in Canada, but if you think of a home as somewhere to live and you expect to stay in the house five to 10 years then it’s a better time now than its been in many years,” he said.

“If someone really has the ability to wait, it could be worth waiting a few more months and see where the market goes but you don’t want to buy in a rush.”

Butler said he advises potential homebuyers to hold off on purchasing a home unless they have to.

“Nobody should buy right now unless they have to. If you are a first-time buyer facing no pressure, do nothing until May or June and see how the markets perform,” he said.

Not all experts are predicting a grim future for Ontario home prices. Kari Norman, an economist with Desjardins, told CTV News Toronto that she believes that the housing market in Ontario will stabilize in 2026.

“We expect it to gradually increase over the next year,” she said. “I think first time home buyers have some time, particularly in Toronto, because we have several months of inventory listed for sale, even when sales start to pick up. I don’t think we will see the pressure on prices right away. That could come more toward the middle or end of next year.”