Writing in December 2025, the most likely 2026 for the Toronto and GTA housing market is a balanced one. Expect more sales than in 2025, average prices moving roughly 3% in either direction over the year, and neither a crash nor a boom. CMHC, RBC, TD and CREA all point that way.
I am Moe Asgarian, a Principal Real Estate Broker in Toronto with RE/MAX, ranked #47 worldwide and in the top 1% in Canada. I am in the optimistic camp about the year ahead, but I want to go through the numbers rather than the mood, because the people who are very optimistic and the people who are very frightened are both misreading 2026.
Where the Market Stood at the End of 2025
At the end of 2025 the average home price in the City of Toronto was about $960,000, roughly 5.5% lower than a year earlier. Through 2025, apartments fell further, around 8%. The year had started badly. In February 2025 transaction volume dropped about 28% from the month before and the market essentially went quiet.
Then interest rates came down over the summer of 2025 and the market moved. July 2025 was the strongest July since 2021. Rates were lower, sales improved, and buyers came back gradually. So the market I am describing in December 2025 is not hot, but it is a long way from the silence of early in the year, and still a long way from its peak.
Why a Fast Recovery in 2026 Is Unlikely
There is a group that expects the market to start recovering the moment 2026 begins. The institutions do not support that. Reports from Canada Mortgage and Housing Corporation and from RBC and TD suggest two things instead: sales improve somewhat in 2026, and prices move a little up or a little down. No surge and no collapse. The Canadian Real Estate Association forecast for 2026 also has transaction counts above 2025 and the national average price higher.
That is the shape of it as of December 2025. The question worth more of your attention is what to watch during the year, because four things will decide which version of 2026 we actually get.
Interest Rates and the Mortgage Renewal Wave
Rates come first. Through 2025 we watched every Bank of Canada meeting, and the cuts did help the market. That continues into 2026. The worry attached to it is mortgage renewals. A large number of households renewing in 2026 will roll off Covid era rates near 2% onto rates closer to 3.5% to 4%. The stress test that was criticised for years exists for exactly this moment, and I am hoping it does its job and keeps the jump in monthly payments manageable for those families.
The Trade War and the Jobs It Touches
Second is the tariff dispute with the United States. It has disturbed business and the wider economy in Canada and hit several large sectors: manufacturing companies, technology companies, finance, and logistics and transport. Jobs in those businesses are under threat, and that feeds straight into the housing market. People do not buy when they are unsure about next year's paycheque. My hope is that the tension fades during 2026 so the market can move forward without the fear of unemployment and financial insecurity sitting on top of it.
New Supply, Investors and the Rental Market
Third is inventory. Very few new projects are starting right now, but the projects built in earlier years are scheduled to complete in 2026. That means months of inventory rises, especially in the condo market. For investment buyers this is an attractive opening and some have already taken it. In 2025, transactions in units under $500,000 grew about 47%, and many of those buyers were investors. If more investors come in during 2026 they help bring months of inventory down, which is good news for everyone in that segment, so this is the trend I will be following.
Fourth is rent. The rental market takes its cue from the sale market but it also has trends of its own. I do not expect rents to collapse in 2026. Average rent probably comes down a little further, but a large number of families still cannot afford to buy, and they stay in that market as tenants. As long as the demand is there, rents do not fall far.
Three Scenarios for 2026
The optimistic case is that the trade war ends, the Canadian economy performs better and the Bank of Canada keeps rates low. More buyers trust the housing market and sales rise. I personally think that is possible, but in 2027 rather than 2026, and I would be happy to be proven early.
The middle case is that the market stays balanced, nothing is settled, and prices swing about 3% either way across the year. No large crash and no large recovery. This is closest to my own forecast. I expect transaction counts to be higher than in 2025, and I am fully aware we are not getting the heat of 2021 back. My prediction is that freehold homes and townhouses do better in 2026 than they did in 2025. In a market like that, a household with steady work and steady income that is investing for the long term can buy very well, move up to a better home, or make a good first purchase.
The pessimistic case, and I hope it stays hypothetical, is everything tangling at once: the trade war intensifies, unemployment figures climb much higher and renewals squeeze people harder and harder. I do not expect that. Canada's problems have grown in recent years, but it is still a dependable country, and we know that both government and the banks have support programs for difficult conditions. I do not believe we end 2026 in worse shape than we are in now.
If you want to know what any of this means for your own purchase, sale or renewal timing, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.
Frequently asked questions
Will Toronto house prices crash in 2026?
A crash is the least likely of the three scenarios. Writing in December 2025, reports from CMHC, RBC and TD and a CREA forecast all pointed to modest improvement in sales with prices moving slightly up or down. My own expectation for 2026 is a swing of roughly 3% either way across the year rather than a collapse.
Is 2026 a good year to buy a home in the GTA?
For a household with steady work and steady income that is investing for the long term, a balanced market is a good place to buy, because there is room to negotiate and no bidding frenzy. As of December 2025 I expect freehold homes and townhouses to perform better in 2026 than they did in 2025.
What happens to Canadian mortgage renewals in 2026?
A large number of households renew in 2026 and come off Covid era rates near 2% onto rates closer to 3.5% to 4%. The stress test applied when those mortgages were approved exists to make that jump in monthly payments manageable, but renewals remain the single biggest risk to watch through the year.