Multiple authoritative sources are now forecasting price declines in Ontario’s housing market in 2025, before a potential rebound in 2026- 27. Key economic drivers such as investor sentiment, interest rate trajectories, and policy developments will play critical roles in how the recovery unfolds.
2025: Market Cools Across Ontario
- CMHC forecasts a ~2% drop in Canada’s average home price for 2025, with steeper declines in Ontario and British Columbia. A modest recovery is expected in 2026, as economic conditions improve. Source
- A Reuters poll of 16 housing experts also predicts a 2% decline in 2025, with prices stagnating in 2026. Stabilization and recovery could follow in 2026—contingent on the easing of trade war tensions and further rate cuts. Source
- CREA forecasts a 1.7% decline in average home price in 2025, rising back to a 3% increase in 2026 nationally. Ontario is among the regions expected to experience declines in 2025. Source
- RBC Economics expects prices to dip in late 2025 and into 2026—especially in Ontario and B.C., where inventory levels and affordability pressures are highest. Source
- Central 1 projects Ontario’s average home prices to fall 1.0% in 2025, with modest gains in 2026 (+1.2%) and 2027 (+2.1%). Source
- The Ontario Ministry of Finance, in its 2025 Provincial Budget, anticipates a 1.2% decline in average home resale prices in Ontario for 2025, followed by modest growth in 2026 and 2027. Source
2026–27: Gradual Market Recovery
- CMHC sees a gradual stabilization starting in 2026, assuming easing economic headwinds and improved confidence. Source
- RBC projects a recovery in demand and pricing in the second half of 2025 into 2026, especially if economic fears subside. Source
- CREA forecasts prices climbing ~3% in 2026 following the dip in 2025. Source
- Central 1 outlines a path of continued gains into 2027, with annual growth around 2.1%. Source
- The Ontario Budget aligns with this view—forecasting modest home price growth for 2026 and 2027 after the dip in 2025. Source
- TD Economics expects improved sales and prices in 2026, though affordability challenges may temper gains in Ontario and B.C. Source
Key Drivers Shaping the Forecast
Investor Sentiment & Inventory Pressure
Ontario’s condo market, especially in the GTA, is facing waning investor interest and rising unsold inventory, contributing to downward price pressure. Source
Interest Rates & Monetary Policy
Predictions for continued Bank of Canada rate cuts, if realized, could support recovery in the second half of 2025 and into 2026. Variable-rate mortgages may become more appealing. Source
Trade Tensions & Economic Uncertainty
Continued tariffs and geopolitical uncertainty are undermining business confidence, demand, and affordability, especially in high-cost provinces like Ontario. Source
Policy Interventions & Housing Supply
Existing housing legislation (e.g., the More Homes for Everyone Act) and related infrastructure policies may support supply growth over tim, but their near-term impacts remain limited. Source
Conclusion
Ontario’s housing market is expected to remain under pressure through 2025, with prices dipping further in many regions. However, the majority of forecasts suggest that stability and gradual growth could return in 2026–27, depending on interest rates, economic recovery, and housing policy outcomes.
For buyers, this could mean more opportunities in 2025, while sellers may benefit from waiting until the market begins to stabilize.
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