Each year, discussions around Toronto real estate grow louder as buyers, sellers, and investors try to understand what the next twelve months might bring. With 2025 marked by volatility, a changing political landscape, and varied outcomes across different segments of the market, many are wondering how 2026 will unfold.
The past year reminded everyone that not all property types respond to the market in the same way. While some neighbourhoods remained competitive, others softened. While certain condos saw slower movement, larger units continued to attract steady interest. Looking ahead, 2026 appears to be a year where stability, strategy, and confidence will determine how the market performs.
Pricing Stability in Early 2026
If economic conditions remain consistent, the first half of the year is likely to bring flat pricing. Much of 2025 followed a familiar cycle: momentum in spring, slower activity in summer and winter, and a brief uptick in fall before the market quieted again. With no major rate shocks or tariff changes expected, the early months of 2026 may mirror this stability.
However, once economic clarity returns, buyer confidence usually follows. That confidence is often the spark that drives transaction volume upward, and with more transactions comes upward pressure on prices.
Interest Rates Holding Steady
One of the most significant improvements over the past year has been the drop in both fixed and variable mortgage rates. Many homeowners who purchased during the ultra-low-rate period of 2021 are approaching renewal, and while their new rates are higher than what they secured originally, they are far more manageable than the peaks seen in 2023 and 2024.
Current rates in the mid-threes to mid-fours create a much healthier environment, and if rates settle near three percent, the market could accelerate more quickly than expected. Even a modest shift in affordability can re-energize demand.
Why Smaller Condos May Remain Slow
Entry-level condos faced notable challenges in 2025. First-time buyers hesitated due to uncertainty, and investor calculations often didn’t align with cash-flow goals. Until sentiment improves and the numbers begin to work for both groups, activity in this segment is expected to remain subdued. When first-time buyers re-enter and investors see clearer returns, momentum will return to this price bracket, reducing inventory and restoring competition.
The Strength of Larger Condos
In contrast, larger condos—especially those with functional layouts, parking, a second bedroom, and strong locations—performed well throughout 2025. Buyers were able to secure units at prices well below the highs of recent years, and demand remained steady.
This trend is likely to continue in 2026. These units have already helped hold up the average condo price, and if sales activity increases, they may be responsible for moderate price growth in the condo sector overall.
2026: A Strong Year for Upsizers
Upsizers saw meaningful opportunities last year, and that dynamic is still present. When a condo decreases in price and the house you want decreases by the same percentage, the savings scale in your favour. For example, a 10 percent decline on a $600,000 condo equals $60,000, but a 10 percent decline on a $1.4 million home equals $140,000.
This arithmetic has allowed many families to secure long-term homes with confidence. With proper planning and a well-timed strategy, upsizers in 2026 may continue to benefit from this gap.
Freehold Properties Poised to Outperform
Freehold homes in established neighbourhoods with strong schools and desirable layouts remain scarce, and scarcity drives competition. Over the last several months, many of these listings sold quickly and often attracted multiple offers despite a broader market slowdown.
In 2026, freehold properties are expected to outperform other segments, largely due to limited supply and persistent demand. The return of seasonal market patterns—busy spring and fall markets—will likely support this momentum.
Looking Ahead
Toronto real estate remains complex, but the upcoming year offers clarity in several areas. Pricing stability, improving rates, segmented condo performance, and strong opportunities for upsizers will shape the early part of 2026. Meanwhile, freehold homes continue to hold their place as the most competitive category in the city.
As the year unfolds, market confidence will be the key factor to watch. Once it strengthens, the market tends to shift quickly, rewarding those who prepare early and understand the nuances of each property segment.
The past year reminded everyone that not all property types respond to the market in the same way. While some neighbourhoods remained competitive, others softened. While certain condos saw slower movement, larger units continued to attract steady interest. Looking ahead, 2026 appears to be a year where stability, strategy, and confidence will determine how the market performs.
Pricing Stability in Early 2026
If economic conditions remain consistent, the first half of the year is likely to bring flat pricing. Much of 2025 followed a familiar cycle: momentum in spring, slower activity in summer and winter, and a brief uptick in fall before the market quieted again. With no major rate shocks or tariff changes expected, the early months of 2026 may mirror this stability.
However, once economic clarity returns, buyer confidence usually follows. That confidence is often the spark that drives transaction volume upward, and with more transactions comes upward pressure on prices.
Interest Rates Holding Steady
One of the most significant improvements over the past year has been the drop in both fixed and variable mortgage rates. Many homeowners who purchased during the ultra-low-rate period of 2021 are approaching renewal, and while their new rates are higher than what they secured originally, they are far more manageable than the peaks seen in 2023 and 2024.
Current rates in the mid-threes to mid-fours create a much healthier environment, and if rates settle near three percent, the market could accelerate more quickly than expected. Even a modest shift in affordability can re-energize demand.
Why Smaller Condos May Remain Slow
Entry-level condos faced notable challenges in 2025. First-time buyers hesitated due to uncertainty, and investor calculations often didn’t align with cash-flow goals. Until sentiment improves and the numbers begin to work for both groups, activity in this segment is expected to remain subdued. When first-time buyers re-enter and investors see clearer returns, momentum will return to this price bracket, reducing inventory and restoring competition.
The Strength of Larger Condos
In contrast, larger condos—especially those with functional layouts, parking, a second bedroom, and strong locations—performed well throughout 2025. Buyers were able to secure units at prices well below the highs of recent years, and demand remained steady.
This trend is likely to continue in 2026. These units have already helped hold up the average condo price, and if sales activity increases, they may be responsible for moderate price growth in the condo sector overall.
2026: A Strong Year for Upsizers
Upsizers saw meaningful opportunities last year, and that dynamic is still present. When a condo decreases in price and the house you want decreases by the same percentage, the savings scale in your favour. For example, a 10 percent decline on a $600,000 condo equals $60,000, but a 10 percent decline on a $1.4 million home equals $140,000.
This arithmetic has allowed many families to secure long-term homes with confidence. With proper planning and a well-timed strategy, upsizers in 2026 may continue to benefit from this gap.
Freehold Properties Poised to Outperform
Freehold homes in established neighbourhoods with strong schools and desirable layouts remain scarce, and scarcity drives competition. Over the last several months, many of these listings sold quickly and often attracted multiple offers despite a broader market slowdown.
In 2026, freehold properties are expected to outperform other segments, largely due to limited supply and persistent demand. The return of seasonal market patterns—busy spring and fall markets—will likely support this momentum.
Looking Ahead
Toronto real estate remains complex, but the upcoming year offers clarity in several areas. Pricing stability, improving rates, segmented condo performance, and strong opportunities for upsizers will shape the early part of 2026. Meanwhile, freehold homes continue to hold their place as the most competitive category in the city.
As the year unfolds, market confidence will be the key factor to watch. Once it strengthens, the market tends to shift quickly, rewarding those who prepare early and understand the nuances of each property segment.
