Developers weighed fresh demand against chronic supply gaps and election-year policy risk
Canada’s housing market entered spring 2026 in a markedly different place from a year earlier, as lower borrowing costs and two years of pent‑up demand began to filter through to buyers.
The Bank of Canada’s rate‑cutting cycle, which started in 2024, brought the policy rate well off its 5% peak, easing payment pressure for variable borrowers and pulling five‑year fixed mortgage rates down from 2023 highs.
That shift translated into a cautious but real pick‑up in activity among first‑time buyers and move‑up households who sat out the peak‑rate period, according to Ladan Hosseinzadeh Sadeghi, president and CEO of GTA‑based Sky Property Group Inc.
“What we’re seeing this spring is a market that has found its floor,” Hosseinzadeh Sadeghi said.
“There’s pent‑up demand that built for two years. As rates stabilize, buyers who were waiting – and there are a lot of them – are re‑entering. The question for developers and sellers alike is whether supply can respond fast enough.”
Supply strain and a fractured condo market
That supply question remains acute. Canada Mortgage and Housing Corporation maintained that Canada needs about 3.5 million additional homes by 2030, on top of what is already in the pipeline, to restore affordability.
New CMHC data also showed record or near‑record levels of purpose‑built rental construction in major centres, even as overall starts moderated.
“Every city in Canada – Toronto, Vancouver, Calgary, Ottawa – is dealing with the same fundamental equation: not enough homes for the people who need them,” she said.
“That’s a challenge from a policy standpoint, but it’s also a signal for serious developers. The underlying demand isn’t going away. If you build thoughtfully, in the right locations, with the right product mix, the fundamentals are sound.”
In the GTA, detached and semi‑detached properties in established neighbourhoods saw the sharpest response in the $800,000 to $1.4 million band, where lower rates most directly expanded buying power.
By contrast, pre‑construction condos remained strained after a steep fall in new‑condo sales through 2024 that took volumes back to late‑1990s levels.
Developers leaned on extended deposits, rate buydowns and phased pricing to restart absorption, while institutional capital continued to favour rental towers.
“This is not a monolithic market,” Hosseinzadeh Sadeghi said.
“The dynamics in Scarborough are different from Mississauga, which are different from North York. Product type, local zoning, proximity to employment nodes, transit access – all of these variables matter enormously. Smart buyers and smart developers do their homework at the neighbourhood level.”
Election‑year policy and where developers saw upside
Housing policy also sits at the centre of a 2026 federal election campaign, with parties trading promises on GST relief for new builds, accelerated infrastructure spending and incentives tied to municipal zoning reform.
“Every election brings housing promises. What the industry needs isn’t more announcements – it’s faster approvals, predictable development charges, and zoning reform that actually reduces the timeline from concept to construction,” she said.
Despite volatility, Hosseinzadeh Sadeghi pointed to land assembly along transit‑rich corridors, mixed‑use projects with affordability components, and rental‑to‑ownership conversion models as strategies that still work in 2026.
“The developers who will define the next decade in Canadian real estate are the ones who can work with complexity – complex sites, complex policy environments, complex financing,” she said.
“This is not a market for the faint of heart, but for those willing to do the hard work, the opportunity is substantial.”
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