Canada Housing Market Forecast 2026: How Rising Rates Impact Prices

How Does the Latest Interest Rate Hike Impact the Canadian Real Estate Market?

2026 Housing Market Forecast: What Rising Mortgage Rates Mean for Ontario, Alberta, and Toronto Condo Buyers, Sellers, and Investors

By Alex J. Wilson | Broker/Owner, RE/MAX Wealth Builders Real Estate | November 2, 2026

On October 28, 2026, the Bank of Canada increased its overnight interest rate by 0.25 percentage points, bringing its policy rate to 2.50%.

This is an important development for the Canadian housing market, but I believe the impact will be very different in Ontario compared to Alberta.

In Ontario, I expect rising borrowing costs, buyer uncertainty, and seasonal weakness to put further downward pressure on housing prices over the next six months.

In Alberta, a combination of relatively affordable housing and substantial investment in energy and infrastructure could create a much more resilient real estate market.

My forecast: Ontario housing prices could decline another 5% over the next six months, while Alberta demonstrates greater resilience as major investment projects move forward.

For buyers, sellers, and real estate investors, understanding these differences is critical to making informed decisions.

Before we look at where the market is heading, we need to understand what's driving mortgage rates higher.

Understanding Mortgage Rates: Fixed vs. Variable

There are two primary types of mortgage rates in Canada: fixed-rate mortgages and variable-rate mortgages.

While both affect housing affordability, they respond to different economic forces.

1. Fixed-Rate Mortgages: Why Have Rates Already Been Rising?

Fixed mortgage rates are primarily influenced by government bond yields rather than directly by the Bank of Canada's overnight interest rate.

The important distinction is that an increase in the Bank of Canada's policy rate does not automatically increase existing fixed mortgage rates.

However, bond markets have already been responding to several global economic developments, putting upward pressure on the cost of new fixed-rate mortgages.

There are three major factors driving this trend.

1. The War in Iran and Inflationary Pressures

The conflict involving Iran has contributed to higher oil prices and additional inflationary pressures throughout the global economy.

When investors anticipate higher inflation, they generally demand greater returns for lending money through bonds.

Think of it this way: if I'm lending you money for five years and expect inflation to erode its purchasing power, I'm going to demand a higher interest rate to compensate for that risk.

As bond yields increase, lenders face higher funding costs, which can translate into higher fixed mortgage rates.

2. The Trade War and Economic Uncertainty

The ongoing trade war has created competing economic pressures.

On one hand, tariffs increase the cost of imported goods, contributing to inflation and putting upward pressure on interest rates.

On the other hand, trade uncertainty can slow economic growth, which typically puts downward pressure on rates.

With the Canadian economy performing better than many anticipated, inflation concerns have remained an important factor supporting higher borrowing costs.

3. The AI Infrastructure Boom and Demand for Capital

The massive global investment in artificial intelligence infrastructure is creating extraordinary demand for capital.

Technology companies are investing billions into data centres, energy infrastructure, computing capacity, and related developments.

All of this requires financing.

As more companies compete for investment capital, borrowers may need to offer higher returns to attract lenders and investors.

This competition for capital can contribute to higher bond yields and borrowing costs, although the relationship also depends on monetary policy, investor demand, and broader financial conditions.

The takeaway: Fixed mortgage rates are influenced by global financial markets, inflation expectations, and government bond yields. They can rise or fall even when the Bank of Canada leaves its policy rate unchanged.

2. Variable-Rate Mortgages: The Bank of Canada Factor

Variable-rate mortgages are more directly influenced by the Bank of Canada's monetary policy.

When the Bank of Canada increases its overnight lending rate, commercial banks generally raise their prime lending rates, increasing borrowing costs for variable-rate mortgage holders.

The October 28 rate increase introduces another challenge for an already cautious housing market.

Historically, when the Bank of Canada begins increasing interest rates, we often see buyers temporarily move to the sidelines.

Why?

Because buyers want certainty.

Purchasing a home is one of the largest financial commitments most Canadians will ever make.

When borrowing costs are rising, buyers become less confident about what their future monthly payments will look like.

That uncertainty often translates into fewer transactions and greater downward pressure on housing prices.

My Canadian Real Estate Market Forecast: The Next Six Months

I expect Ontario and Alberta to experience two very different market conditions over the next six months.

Ontario Housing Market Forecast: Expect Further Price Pressure

Ontario's housing market is entering a particularly challenging period.

We have three forces working against the market simultaneously:

• Higher borrowing costs: Rising mortgage rates reduce affordability and purchasing power.

• Buyer uncertainty: Purchasers are reluctant to commit while they believe interest rates could continue increasing.

• Seasonal weakness: November, December, and January are traditionally among the slowest months for real estate transactions.

In my experience, buyers don't necessarily need interest rates to fall before they return to the market.

They need confidence that rates have stopped rising.

I believe it may take two consecutive Bank of Canada rate announcements without an increase before many buyers regain that confidence.

Until then, I expect a significant portion of potential purchasers to remain on the sidelines.

My Ontario Housing Market Prediction: Another 5% Price Decline

I forecast an additional 5% decline in Ontario housing prices over the next six months.

This is not a prediction that every property or neighbourhood will decline by the same amount.

Some segments will remain more resilient than others.

However, I expect continued downward pressure as sellers compete for a smaller pool of active buyers.

For investors and long-term purchasers, this could create one of the most attractive buying windows we've seen in years.

The opportunity is not simply purchasing real estate at a lower price.

It's purchasing the right property at a price that makes sense based on long-term fundamentals.

What Does This Mean for Toronto Condo Buyers, Sellers, and Investors?

The Toronto condominium market deserves particular attention because it is highly sensitive to borrowing costs, rental income, housing supply, and investor confidence.

When mortgage rates rise, the impact on Toronto condos can be more pronounced than in other segments of the housing market.

However, the opportunities also become more interesting for purchasers with a long-term investment horizon.

For Toronto Condo Buyers: More Negotiating Power

Higher mortgage rates reduce purchasing power, but they can also create opportunities.

When fewer buyers are actively competing for properties, purchasers may have more leverage to negotiate prices, conditions, and closing dates.

The key is understanding what a condo is actually worth based on recent comparable sales rather than relying solely on the seller's asking price.

In today's market, the difference between a well-negotiated purchase and an overpriced condo could have a significant impact on long-term investment returns.

For Toronto Condo Sellers: Pricing and Positioning Matter More Than Ever

Selling a Toronto condo in a slower market requires more than simply placing a property on MLS.

Buyers have more choices, and many are increasingly selective.

Successful condo sales depend on understanding competing inventory, recent comparable sales, building-specific market conditions, and how the property is positioned.

We've seen firsthand how strategic pricing and marketing can make the difference.

For example, in our sale of a condominium at L Tower, 8 The Esplanade, we needed to position a unique one-bedroom-plus-den layout against competing properties in a challenging market.

Read our Toronto condo selling case study: How We Sold at L Tower

We also successfully sold a larger two-bedroom condominium at 400 Adelaide Street East by developing a strategy around the property's characteristics and market competition.

Read how we sold a downtown Toronto condo in a tough market

In a market where buyers have choices, pricing and execution matter more than ever.

For Toronto Condo Investors: Focus on the Numbers

For investors, the most important consideration is the relationship between purchase price, rental income, financing costs, and long-term appreciation potential.

A lower purchase price does not automatically mean a good investment.

Likewise, higher mortgage rates do not automatically mean an investment no longer makes financial sense.

Consider a condo that has declined significantly in value but continues to generate strong rental demand.

If the purchase price has fallen enough to offset higher financing costs, the investment may present a compelling long-term opportunity.

This is why I look at the numbers rather than market headlines.

I've been selling Toronto real estate since 2008 and investing in condominiums since 2012.

Over that period, I've built a real estate portfolio valued at approximately $20 million, including condominium investments and multifamily properties.

I've experienced different market cycles as both a real estate broker and an investor.

And one of the most important lessons I've learned is that wealth is often built by purchasing quality assets during periods of uncertainty and holding them through multiple market cycles.

For a closer look at how condo investment opportunities are changing, read:

Toronto Condos Are Cash Flow Positive Again: Here's the Math

Alberta Housing Market Forecast: A Multibillion-Dollar Investment Super-Cycle

While Ontario faces continued housing market pressure, Alberta is positioned to benefit from several powerful economic forces.

First, Alberta remains considerably more affordable than Ontario, giving its housing market a stronger foundation when borrowing costs increase.

Second, Alberta is positioned to benefit from a multibillion-dollar investment super-cycle driven by energy, infrastructure, and industrial development.

Unlike Ontario, where I expect higher interest rates to suppress demand over the short term, Alberta could benefit from substantial job creation, rising investment, and increasing demand for housing.

And we're not talking about small investments.

Recent announcements from the Government of Canada and economic research from RBC provide insight into just how significant this investment cycle could become.

140,000 Jobs from the Pacific Link Pipeline

On October 1, 2026, Prime Minister Mark Carney announced that the proposed Pacific Link pipeline, connecting Alberta's oil production to Canada's West Coast, had been designated a project of national interest.

The project is intended to expand Canada's ability to export oil to Asian markets and reduce its dependence on the United States as its primary energy customer.

According to the Prime Minister's announcement, the proposed Pacific Link pipeline is estimated to create 140,000 jobs across Canada, including employment associated with engineering, construction, pipeline development, and supporting industries.

The government also estimates that the project could contribute more than $20 billion annually to Canada's GDP and generate more than $100 billion in government revenue by 2060.

These are government projections for a proposed project, not employment positions already created.

Source: Prime Minister of Canada — Pacific Link Pipeline Announcement, October 1, 2026

RBC Projects 52,100 Permanent Jobs in Alberta

The longer-term employment outlook is equally important.

In its report A New Energy: Steering Canada's Next Oil and Gas Boom, RBC examines the economic implications of a major expansion in Canada's energy sector.

Under RBC's high-growth scenario, Alberta could gain approximately 52,100 permanent oil and gas production jobs by 2040.

These are ongoing positions associated with expanded energy production, separate from the temporary employment required to construct infrastructure.

RBC also projects that the broader Canadian oil and gas investment cycle could generate more than $200 billion in construction capital expenditures through 2040.

Under its high-growth scenario, construction activity across Alberta and British Columbia could require approximately 109,000 to 132,000 workers during peak activity around 2029–2030.

This represents a substantial potential increase in demand for skilled labour.

Source: RBC Thought Leadership — A New Energy: Steering Canada's Next Oil and Gas Boom

What Does This Mean for Alberta Real Estate?

For real estate investors, I believe these developments could create two important economic forces.

1. Increasing Housing Demand

Large-scale investment attracts workers, creates permanent employment, supports incomes, and stimulates population growth.

Permanent jobs are particularly important for the housing market.

Construction activity creates demand for temporary accommodations and rental housing, while permanent employment can support long-term household formation and homeownership.

If Alberta adds tens of thousands of permanent jobs through expanded energy production, that could have a meaningful impact on residential real estate demand.

More employment and economic activity generally translate into greater demand for housing.

For investors, this presents an opportunity to identify markets positioned to benefit before the full impact of economic growth is reflected in property prices.

2. Constraints on New Housing Supply

This is the part of the investment cycle that I believe deserves more attention.

Major infrastructure projects compete for many of the same skilled trades required to construct residential properties.

Pipefitters, electricians, welders, equipment operators, and other skilled workers are essential to both industrial infrastructure and residential development.

RBC specifically identifies potential skilled-labour shortages as one of the challenges associated with Canada's next energy investment cycle.

As workers move toward major energy and infrastructure projects, labour availability for residential construction could become increasingly constrained.

This could result in higher construction costs, longer development timelines, and potentially fewer new homes being delivered.

We could therefore see an unusual combination:

Increasing housing demand at the same time new housing supply becomes more difficult and expensive to deliver.

For real estate investors, this is a compelling long-term fundamental.

My Alberta Real Estate Forecast

I expect Alberta to demonstrate greater price resilience than Ontario, with the potential for stronger housing demand and upward price pressure as major investment projects move forward.

Alberta is not immune to higher interest rates.

However, its relative housing affordability and economic investment outlook provide important advantages.

Of course, large infrastructure projects involve permitting, financing, execution, and timing risks. Not every proposed project will necessarily proceed as anticipated.

But the direction of potential investment is significant.

The difference between Ontario and Alberta highlights an important investment principle.

Real estate markets are local. Economic fundamentals matter more than national headlines.

What Could Cause Canadian Interest Rates to Fall Again?

There are two major developments I'm watching closely.

1. A Correction in the AI Investment Boom

The extraordinary investment in artificial intelligence has created significant demand for capital.

If the AI investment boom experiences a major correction, it could trigger reduced corporate investment, slower economic growth, and financial market instability.

In a sufficiently severe economic downturn, central banks could respond by aggressively reducing interest rates to support the economy.

A reduction of 100 to 200 basis points (1% to 2%) over a 12-to-18-month period is one possible scenario, depending on the severity of the economic fallout and inflation conditions.

This is not my base-case forecast, but it is an important scenario worth monitoring.

2. A Resolution to the Conflict Involving Iran

A resolution to the conflict could help stabilize global energy markets and reduce inflation expectations.

Lower inflation expectations could put downward pressure on bond yields, potentially allowing fixed mortgage rates to decline.

Of course, this would depend on other economic conditions, including government borrowing, market expectations, and the broader outlook for inflation.

Frequently Asked Questions About Interest Rates and Toronto Real Estate

Will Toronto condo prices fall further in 2026?

My forecast is for additional downward pressure on Ontario real estate prices over the next six months, potentially reaching another 5%.

Toronto condo performance will vary depending on building, location, competing inventory, and property type.

For anyone considering buying or selling a condominium, a building-specific analysis is more valuable than relying exclusively on broader market averages.

Is 2026 a good time to buy a condo in Toronto?

For buyers and long-term investors, softer pricing may create attractive opportunities.

The key is evaluating individual properties based on comparable sales, financing costs, rental income, and long-term investment fundamentals.

Buying at a discount can create an advantage, but only when the underlying numbers make sense.

Should I sell my Toronto condo now or wait?

The right decision depends on your financial goals, carrying costs, competing listings, and the pricing trends within your building.

Some owners may benefit from selling now rather than absorbing additional carrying costs or potential price declines.

Others may have the financial flexibility and long-term outlook to hold through the current market cycle.

A property-specific market analysis is essential.

How do higher mortgage rates affect Toronto condo investments?

Higher mortgage rates increase financing costs, potentially reducing cash flow and investment returns.

However, lower purchase prices may offset some of these costs.

Investors should evaluate the full financial picture, including mortgage payments, property taxes, condominium maintenance fees, insurance, rental income, and potential appreciation.

What is the difference between fixed and variable mortgage rates in Canada?

Fixed mortgage rates are primarily influenced by government bond yields, while variable mortgage rates are more directly connected to the Bank of Canada's monetary policy.

A Bank of Canada rate hike typically increases variable mortgage rates through lender prime rates, while fixed rates respond to broader financial market conditions.

When will buyers return to the Toronto real estate market?

I believe buyer confidence will strengthen once there is greater certainty that interest rates have stabilized.

My expectation is that two consecutive Bank of Canada announcements without a rate increase could provide an important confidence signal.

However, affordability, employment, housing inventory, and broader economic conditions will also influence the pace of recovery.

Conclusion: Two Markets, Two Very Different Opportunities

My outlook for the next six months is straightforward.

Ontario: I expect buyer activity to remain subdued as households adjust to higher borrowing costs. Combined with seasonal weakness, I forecast an additional 5% decline in housing prices over the next six months.

Alberta: I expect greater resilience as housing affordability, employment growth, and major infrastructure investment support long-term housing demand.

RBC's projection of 52,100 permanent Alberta energy-sector jobs by 2040, alongside the federal government's estimate of 140,000 jobs across Canada associated with the proposed Pacific Link pipeline, highlights the scale of potential economic activity.

If these investments move forward, the resulting employment growth and demand for skilled trades could have meaningful implications for Alberta's housing market.

Interest Rates: I believe buyer confidence will begin returning once the Bank of Canada delivers two consecutive rate announcements without an increase, signalling greater stability in borrowing costs.

The important distinction is that a slowdown in real estate activity does not necessarily mean a deterioration in long-term investment fundamentals.

In Ontario, declining prices may create opportunities to purchase quality real estate at significant discounts.

In Alberta, the opportunity may come from getting ahead of a multiyear investment cycle that could drive employment, incomes, and housing demand.

For Toronto condo owners, buyers, and investors, the next six months could be an important period for making strategic decisions.

The best real estate opportunities are often created when short-term uncertainty causes buyers to overlook long-term fundamentals.

The key is understanding the difference between temporary market pressure and permanent economic change.

Thinking About Buying, Selling, or Investing in a Toronto Condo?

Whether you're considering selling your existing Toronto condo, purchasing your first property, or expanding your real estate investment portfolio, understanding current market conditions is essential.

At RE/MAX Wealth Builders, we help clients make informed real estate decisions through detailed market analysis, strategic pricing, and firsthand investment experience.

If you're considering your next move, I'd be happy to help you evaluate your options.

Contact Alex J. Wilson

Broker/Owner — RE/MAX Wealth Builders Real Estate

Email: alex@remaxwealth.com

Phone: 416-996-5181

Website: https://www.remaxwealth.com

Maximize your wealth. Minimize your stress.

Related Toronto Condo Market Insights

For additional information about Toronto condominium sales, investing, and market trends, explore these articles:

Toronto Condos Are Cash Flow Positive Again: Here's the Math

A real-world look at condo purchase prices, rental income, mortgage costs, and investment returns.

How We Sold a Toronto Condo at L Tower

An example of how strategic pricing and property positioning can make a difference in a challenging market.

How We Sold a Downtown Toronto Condo at 400 Adelaide Street East

A Toronto condo sales case study examining the strategy behind selling a larger downtown condominium.

Why Toronto Condos Are a Smart Currency Hedge

An exploration of Toronto condo investing and how exchange rates can influence investment opportunities for purchasers holding U.S. dollars.

About the Author: Alex J. Wilson

Alex J. Wilson is a Toronto real estate broker, condominium investor, and Broker/Owner of RE/MAX Wealth Builders Real Estate.

Selling real estate since 2008 and investing since 2012, Alex specializes in Toronto condominium sales, real estate investing, and helping clients build long-term wealth through property ownership.

Ranked the #2 Individual RE/MAX Agent in Canada for closed sales in 2025, Alex has built a personal real estate portfolio valued at approximately $20 million, including condominium investments and multifamily properties.

His professional achievements include reaching #1 in Canada for individual transactions with RE/MAX in 2022, receiving the RE/MAX Lifetime Achievement Award at age 35, and being inducted into the RE/MAX Circle of Legends at age 40.

Through RE/MAX Wealth Builders, Alex helps Toronto condo owners, buyers, and investors navigate changing market conditions with data-driven pricing strategies, investment analysis, and firsthand market experience.

Learn more about Alex J. Wilson and RE/MAX Wealth Builders

Alex J. Wilson | Broker/Owner

RE/MAX Wealth Builders Real Estate

1251 Yonge Street, Toronto, Ontario

Email: alex@remaxwealth.com

Phone: 416-996-5181

Website: https://www.remaxwealth.com

Disclaimer: The forecasts and investment scenarios discussed in this article represent the author's opinions as of November 2, 2026, and are not guaranteed outcomes. The employment and economic projections cited are conditional forecasts, not guaranteed results. Real estate values, financing conditions, rental income, and economic circumstances can change. Readers should conduct appropriate due diligence and obtain professional financial, legal, and tax advice before making investment decisions.