‘The Gap Is Narrowing’: What to Expect From the 2026 Spring Canadian Housing Market

This spring will be different than the last for the Canadian housing market, suggests one top economist — but it doesn’t mean a rebound is imminent.

By Josh Sherman | 3 minute read

Canada’s strongest housing markets are beginning to converge with its weakest.

Until recently, Canadian real estate was a “tale of two markets” — with Ontario and B.C. in decline and the prairies and eastern Canada flexing their muscles — but a leading economist suggests that a different trend is taking root as the spring buying season gets underway.

“Clearly, we’ve seen a situation in which the housing market in Canada was a tale of two markets. Alberta did relatively well, eastern Canada did very well, and Ontario and B.C. did not do very well,” Benjamin Tal, CIBC’s deputy chief economist, tells Wahi. “Now, he continues, “the gap is narrowing.”

The gap between the weak and the strong markets is not closing because those in B.C. or Ontario are doing any better, Tal says. Rather, demographic and economic factors are emerging headwinds. “Alberta and the rest are starting to slow down, clearly because of lower population growth [and] some affordability issues with prices still rising over the past few years,” Tal explains. 

Reduced federal immigration targets have clipped some demand for housing in Alberta and elsewhere. And despite the fact that cities in the prairies and eastern Canada maintain an affordability edge over their counterparts in Ontario and B.C., home prices in these markets are noticeably less attainable than they were just a few years ago. This is trimming demand further. “Affordability issues are actually a factor in eastern Canada and definitely in Alberta,” notes Tal.

These trends are even expected to claw back the pace of gains in Quebec City and Montreal, which have been leading the country for year-over-year price increases with seemingly unstoppable momentum.

In February, Quebec City prices were up 13% annually, while Montreal values increased a more-than-solid 9%, according to the RPS-Wahi House Price Index. “I think that they are basically lagging indicators,” says Tal of the pricing data. “I think that you will see them joining the group later,” he continues, suggesting the Quebec cities will experience similar slowdowns to Calgary, which was Canada’s hottest housing market as recently as the final months of 2024. 

Since that time, year-over-year price growth in Calgary has fallen from upwards of 10% to a much more stable 2% as of February, as per the RPS-Wahi House Price Index.

Another development expected to hold back the Canadian housing market this spring is uncertainty stemming from trade and geopolitical tensions, the effects of which have already been felt throughout the past year.

“These tensions have raised uncertainty about future employment and income conditions for potential buyers, thereby reducing demand for housing,” according to new commentary from Scotiabank. “This uncertainty increased further in recent weeks with the attacks by U.S. and Israeli forces in Iran and the resulting threat to oil and other goods shipments in the region.”

“Under this highly uncertain global landscape, we do not expect a significant and sustained recovery in housing markets and prices, as potential buyers are likely to keep their wait-and-see approach until these global tensions soften significantly and uncertainty starts dissipating.

Tal doesn’t anticipate any broad regional bright spots this spring as the gap that had defined Canada’s housing market last year gets smaller.

However, at the local level, there may be certain exceptions to the prevailing coolness. “There are some pockets that are not very price sensitive in Victoria, in B.C., even in Toronto, that are doing fine,” the CIBC economist says. “But those are pockets,” Tal emphasizes. 

In recent months, Wahi has observed stronger demand in certain pockets of the Greater Toronto Area, where 7% of neighbourhoods were in overbidding territory as of February, up slightly from 6% in January. 

The latest home sales data from the Canadian Real Estate Association appear to support Tal’s prediction for more widespread softness in the market this spring. In February, Canadian home sales were down 8.1% from the same month last year and 1.3% on a month-over-month basis, according to CREA.

Although CREA says “there was some indication things were starting to pick up speed toward the end of the month,” TD Economist Rishi Sondhi suggests there’s a lot stacked against the market. “More broadly, Canadian housing activity remains subdued, restrained by a myriad of headwinds, like slower population growth, softening job markets, cost-of-living pressures, and economic uncertainty,” he notes in a recent report.