Canada's real estate market may be on the cusp of a gradual recovery, with home sales expected to remain subdued for the remainder of 2026 before seeing a modest acceleration in price growth in 2027, according to a mid-year outlook from Toronto-Dominion Bank.
Current Market Conditions
Home prices have been falling in Canada's major cities for much of this year. The Toronto Regional Real Estate Board reported that home prices in Toronto were down 5.4 per cent in June compared to last year, with the benchmark home price falling to $940,800. In British Columbia, prices fell 1.2 per cent in May to an average of $947,859, according to data from the Canadian Real Estate Association (CREA).
Nationally, CREA reports that prices across the country climbed 1.5 per cent in the month, up to an average of $702,079. However, TD expects prices on a national level to fall 0.3 per cent this year.
Regional Outlook
TD predicts Ontario and British Columbia will experience sales growth in the second half of the year, though it is primarily a rebound from a weaker-than-expected first half. The report notes that price expectations between sellers and buyers may be becoming more aligned, which could support an improving trend in activity.
“Price expectations between sellers and buyers may also be becoming more aligned, greasing the wheels for transactions and supporting an improving trend in activity,” the report said. “Looking ahead to next year, recent affordability improvements should support rising sales activity. Still, sales levels are likely to trail their 10-year averages in both markets by a comfortable margin.”
TD expects prices to turn positive in both provinces in 2027, while B.C. may be on an even quicker timeline due to outperforming luxury home sales.
National Forecast
On a national level, TD expects sales growth to remain positive but the level of sales to stay low. The report states, “Even though sales growth is likely to be positive, the level of sales should remain low. In fact, our forecast sees sales taking until the second half of 2027 to approach their pre-pandemic level, restrained by weak population growth and modest hiring activity over the projection horizon.”
In Alberta, a real estate hot spot over the past few years, prices are up 2.5 per cent to date in 2026, but TD only expects a “modest gain” for the rest of the year, a downgrade from prior projections.
Opportunity for Buyers
For those waiting on the sidelines, the current period may present a window to enter the market before prices begin to rise again. The combination of subdued sales, falling prices in major cities, and improving affordability could create favorable conditions for buyers.
