Five Lessons the 2025 Housing Market Taught Us for 2026

As the winter season begins to take over the GTA and we look towards the new year, the Cityscape team discusses learnings & experiences from the past months. This year in Canadian real estate wasn’t about dramatic boom-or-bust headlines; it was a year of nuance, patience, and profound learning. The lessons we’ve gathered didn’t just come from spreadsheets, but from the front lines—from our agents in the field and the collective vision of our leadership team. 

We sat down with our team to reflect on the truths and lessons that defined 2025 to be ready for the 2026 housing market. This is more than a market recap; it’s a collection of insights we’re carrying forward, ready to serve you better in the year to come.

Lesson 1: “Average Home Price” Doesn’t Tell Your Story

In an era of data overload, it’s easy to get lost in the big numbers. But this year hammered home a truth we’ve always known: real estate is deeply, powerfully local. 

The market isn’t one big story, and it’s a mix of small ones, depending on where you look. Prices change street by street. What’s true in one neighbourhood can look completely different a few blocks away.  

That’s why we tell clients: ‘Average home price’ doesn’t tell you the full story. 

Lesson 2: Interest Rates Were Only Part of the Puzzle

“Interest is a big part of the puzzle, but it’s not the only part”  states our CEO, Adnan Bashir.   

For years, the market narrative was dominated by the trajectory of interest rates, and we’ve observed closely every new Bank of Canada announcement to consider changes in the local dynamics. While these rates remain crucial, 2025 taught us that they don’t operate in a vacuum. 

Many people assumed that once the rates started dropping, affordability would quickly follow. Instead, reality has been more complicated. That’s where the idea of pent-up demand comes in — plenty of buyers are ready to move, but they’re holding back, waiting for a bit more confidence to return to the market. 

Most analysts recognize that confidence took a hit this year. Geopolitical events like the US tariff war created a ripple effect, impacting everything from construction material costs to broader trust from consumers. 

These events remind us that seller opportunities and buyer priorities are shaped by a globalized economy, not just domestic monetary policy. 

Lesson 3: Buyer priorities put feelings over (just) the numbers 

The team agrees that today’s buyers are informed, cautious, and emotionally intelligent about their purchases. They aren’t just buying square footage; they’re defining a lifestyle and investing in a feeling of security.  

“Buyer’s today are more cautious. It’s not just about what they can afford; it’s about how they feel. Yes, there are incentives and rebates, but a lot of people still don’t feel comfortable jumping in just yet.” 

Says Tasneem Zahir, Director of Business Development.

 

This trend toward emotional decision-making in real estate is powerful. It means that a home’s value is increasingly tied to its intangible assets: a welcoming layout, natural light, a sense of community, and move-in readiness. As we’ve explored in our articles on buyer psychology, our homes are deeply linked to our well-being. Buyers in 2025 were making choices with their hearts as much as their calculators, demanding homes that delivered on a promise of happiness, not just a financial return. The way Adnan sees it: 

“Market fundamentals will exert influence in the long term but can easily be overshadowed by sentiment in the short term”. 

 

He provides important advice for buyers and investors: 

“A key lesson is that real estate is not supposed to be a speculative asset such as stocks but more a long-term asset which will go up in time and should be utilized as an asset class to build long-term equity and positive cash flow on a monthly basis.” 

 

Lesson 4: The market has changed 

What’s changed most is the structure underneath. The rental sector has emerged as a quiet pillar of stability, holding firm while other segments waver. Developers are shifting from condo pre-sales to purpose-built rentals, drawn by their steady performance and predictable returns. 

This shift has created a slower, more deliberate market — one defined by fundamentals rather than quick gains. With the pace recalibrated, the need for clarity, strategy, and long-term thinking. 

Lesson 5: The Long-Term Supply Challenge Demands a Shift in Strategy 

The biggest wake-up call of 2025 is coming from new construction. Condo projects across Ontario have slowed, paused, or disappeared from the pipeline as pre-sale demand softens, and financing costs stay high. And that slowdown matters — especially because high-density, entry-level homes are the backbone of long-term supply. 

With fewer projects moving forward, this reality pushes both buyers and investors to rethink their strategy. 

Our VP of Pre-Construction, Lily Toshev, offers her advice: 

“Don’t base your strategy on rapid appreciation. The market in 2026 is more likely to experience a slow, uneven recovery rather than a major boom. Instead, focus on solid fundamentals: strong cash flow, quality locations, and sustained long-term demand. Avoid speculation and negativity.” 

 

Slow & steady is a reliable path forward for a market that will experience a disorganized recovery, still challenged by global volatility. Investing in quality locations with proven demand ensures your assets remain desirable regardless of economic cycles.  

The investors who lean into those fundamentals will be the ones who stay steady while the market resets. 

Looking ahead to 2026 with Hope and Expertise 

As we move into 2026, the market picture looks very different depending on where you stand. Here’s a short list of topics to keep your eye on: 

Migration of people from high priced markets like Ontario and British Columbia (BC) moving to more affordable provinces such as Alberta and the Atlantic provinces in search of lower housing costs and better economic opportunities.  

Within Ontario and BC, there is also a trend of people moving from major urban centers like the Greater Toronto Area (GTA) and Metro Vancouver to smaller, more affordable cities and rural areas within the same province. 

Rate cuts are largely behind us. Several major economies have acknowledged there’s little room left to move, setting a new, higher baseline for borrowing costs.  

Immigration policy changes are also beginning to reshape the market, easing demand in major urban centres that once relied heavily on newcomer-driven growth. 

And while condo pre-sales have slowed, the government’s strong push for purpose-built rentals is reshaping development priorities. Entire buildings are now being designed for long-term rental use — a major shift from the traditional ownership model that’s defined Canadian housing for decades. 

All these developments point to a market that’s redefining what stability looks like. The noise will keep coming — new policies, new predictions — but the real story is fundamentally human. It’s about how people adapt. 

In 2026 we’ll have to read beyond the headlines and monitor signs of returning confidence. Patiently but data ready.  

We remain focused on helping clients make sense of what’s next while staying grounded in what’s real. We’re committed to continuing the conversation—sharing insights, discussing lessons, and exploring what lies ahead. If you have any questions, please reach out to our team. 

Your journey in 2026 starts with a conversation. Let’s talk.