Prospective home buyers in Ontario are receiving stark advice from several market experts: sit tight and wait. This guidance follows a significant two-year decline in property values, with further decreases expected for Ontario home prices in 2026. Data from the Toronto Region Real Estate Board reveals a 6.4 per cent price drop in the Greater Toronto Area last year, while new home sales plunged to a multi-decade low in 2025. Consequently, the prevailing sentiment among many analysts is one of caution, contrasting with more optimistic national forecasts that exclude major Ontario and British Columbia markets.
Ron Butler, a prominent Ontario-based mortgage broker, offers a particularly grim assessment. “The one thing for sure is that it’s going to get worse in Ontario. There is no possibility of better,” Butler told CTV News Toronto. “Thinking otherwise, it’s entirely based on hopium.” His outlook is rooted in several converging economic pressures, including rising unemployment, strained international student enrollment, and geopolitical tensions. However, the most immediate catalyst is the looming wave of mortgage renewals set to hit the market in 2025 and 2026, which he believes will suppress demand and exert additional downward pressure on Ontario home prices.
Major Forecasts Point to Sustained Price Corrections
Recent projections from leading real estate firms reinforce this cautious outlook. Specifically, Royal LePage’s 2026 market outlook, released in December, anticipates year-over-year price increases in several major Canadian cities. Nevertheless, the report paints a decidedly gloomy picture for Canada’s two most expensive markets. It forecasts a 3.5 per cent decline for Vancouver and a 4.5 per cent drop for the Toronto region. These predictions align with data from Nesto Mortgage Experts, showing the average Ontario selling price fell 5.2 per cent year-over-year in November 2025, with condos leading the decline at seven per cent.
Butler expects conditions to deteriorate further in 2026 before potentially levelling off in 2027. He cites a potent combination of macroeconomic and policy factors. Statistics Canada recently reported the unemployment rate rose to 6.8 per cent in December, reflecting a softening labour market. Simultaneously, a new Bank of Canada report indicates roughly 60 per cent of mortgage holders will face sharply higher payments upon renewal, a direct result of moving from historic lows near 1.5 per cent to rates around four per cent. “That’s a significant payment increase and those that had more than one property, that’s hard to manage,” Butler stated, arguing this will limit buyer purchasing power and increase potential supply from over-leveraged investors.
The Mortgage Renewal Wave and Economic Headwinds
The impending renewal shock represents a critical inflection point for the market. Homeowners who secured five-year fixed rates at the peak of the pandemic-era lows are now confronting a drastically different financial reality. This payment shock is likely to curb discretionary spending and could force some investors to sell properties, thereby adding inventory to a market already softened by reduced demand. Furthermore, external factors like tensions between Canada and the U.S. and a notable decline in the international student population are reducing demand in key urban centers, particularly for condominiums. These combined forces create a complex environment where a quick recovery for Ontario home prices appears increasingly unlikely.
Victor Couture, an associate professor of economic analysis and policy at the University of Toronto, agrees a downturn is likely to persist. “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,” Couture told CTV News Toronto. He clarifies that the current climate does not constitute a “housing crash,” but he emphasizes that without rapid population growth, very low interest rates, or strong economic growth, significant price appreciation is improbable. This period, he suggests, is resetting fundamental expectations about housing’s role in wealth building.
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Diverging Expert Opinions on Market Stability
Not all experts share the uniformly pessimistic view. Kari Norman, an economist with Desjardins, predicts a stabilization for the Ontario housing market in 2026. “We expect it to gradually increase over the next year,” she told CTV News Toronto. Norman points to substantial inventory levels, suggesting that even if sales activity picks up, significant price pressure may not emerge until the latter half of the year. “I think first time home buyers have some time, particularly in Toronto, because we have several months of inventory listed for sale… I don’t think we will see the pressure on prices right away,” she noted. This perspective offers a nuanced counterpoint, implying a bottom may form before prices begin a very gradual recovery.
However, the prevailing advice for buyers, especially first-timers, leans heavily toward patience. Couture reframes the purchasing decision by distinguishing between a home as an investment and a home as a place to live. “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 advised. He recommends that buyers with flexibility should wait a few more months to gauge market direction, but cautions against rushed decisions.
Strategic Advice for Prospective Home Buyers
Given the conflicting signals, what is the practical path forward? Butler’s advice is unequivocal: “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.” This wait-and-see approach is designed to provide clarity on how the market absorbs the initial wave of mortgage renewals and whether economic conditions deteriorate further. For those who do proceed, exhaustive due diligence on personal finances and long-term planning is essential, as near-term equity gains seem unlikely. Ultimately, the market for Ontario home prices is in a corrective phase, shifting power toward buyers who can afford to be selective and strategic in their timing.
