Falling values and rising inventory are handing buyers the upper hand
With the second half of 2026’s housing market already underway, the Canadian Real Estate Association (CREA) now sees a slower pace of activity for the full year than it had originally anticipated – but the outlook still varies hugely from one region to the next.
The association expects full-year home resales across the country to fall by 1.4% this year compared with 2025, an update that reverses the modest gain it pencilled in as recently as April.
That revision might suggest the mortgage industry shouldn’t pin its hopes on a steady uptick in market activity anytime soon. But Ontario is forecasted to post higher annual sales growth in 2026 compared with last year and Alberta prices are expected to climb, although Quebec and Atlantic Canada face a tougher picture.
Reaza Ali (pictured top), national business development manager at Heartwood Financial Group, emphasized in a recent interview with Canadian Mortgage Professional that focusing too strongly on the national figures might not be the right approach for mortgage professionals in regional markets.
“There are segments in the Canadian lending landscape and the Canadian real estate market that are still fairly active,” he said. He sees a “fairly liquid and moving” outlook at present for smaller markets, but doesn’t expect a huge upswing in Ontario and British Columbia – provinces where high values and rising interest rates have cooled purchase activity in recent years.
Sliding prices have presented challenges for some homeowners whose mortgages are coming up for renewal, but they’ve also created improved buying conditions for would-be purchasers who previously found themselves frozen out of the market.
“The nice thing is I would say where the values have now come to, there is more opportunity,” Ali said. “We’ve heard headlines about more activity on sales. But on the flipside, you would assume that the values have gone up with that – and they quite frankly have not. They have not, in any significant way. So to me, it’s still a buyer’s market.”
Buyers gaining the upper hand on price
The Bank of Canada has stayed on the sidelines so far this year, opting to hold interest rates unchanged once again on Wednesday (July 15) and giving no indication that it’s prepared to cut between now and the end of 2026.
That has weighed against the market outlook and kept buyers away – but a flood of inventory arriving in many markets has also eased certain chronic supply shortages.
Buyers are also enjoying lighter competition and more time to consider a move instead of rushing through the mortgage and purchasing process. “I believe buyers are demanding a little bit more of the sellers and realize that where the market is with respect to inventory in particular regions, you’re going to have a lot more,” Ali said. “So buyers are being more aggressive with what they’re offering.”
Don’t expect the Bank of Canada to lend buyers a helping hand
Canada’s economy isn’t exactly flourishing, with US tariffs continuing to weigh against its overall performance even if the trade dispute hasn’t been as economically ruinous as first feared.
That sluggishness might normally strengthen the case for Bank of Canada interest rate cuts, a development that would probably boost affordability for homebuyers and add some impetus to the housing market.
But rising oil prices and continuing uncertainty about the duration of the US-Iran war are stoking fears of higher inflation, meaning the central bank is expected to keep rates on hold – and some even say the likelihood of hikes could be growing.
For Ali, that combination of a cautious central bank and a widening supply of inventory points in one clear direction: "Still driving prices down from what I see," he said.
Whether that holds for the rest of 2026 depends largely on how the rate outlook develops. CREA's base case still has sales rebounding 3.7% in 2027, with the average price climbing to $694,164 – a projection that assumes rates stabilize and growth firms up, conditions that have proven elusive for three straight spring markets.
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