The Canadian home prices real estate market is in transition. After climbing to nearly $700,000 during the pandemic era, the national average home price cooled to $682,200 by late 2025. Although this is a small decline, the REMAX 2026 Outlook projects a further drop of 3.7% in 2026, along with a 3.4% increase in sales.
Numbers seem to be trending in the right direction, but for many prospective home buyers, Canadian real estate prices still put home ownership out of reach. Are homes in Canada overvalued? How have home prices gotten to this point, and can aspiring buyers still find ways to get on the property ladder?
Are Canadian Real Estate Prices Excessively High?
With the rapid increases in Canadian real estate prices during the pandemic era, experts and aspiring home buyers alike are wondering if properties are actually overvalued.
The short answer is yes, but not everywhere. By traditional metrics like price-to-income and price-to-rent ratios, Canadian real estate prices are unreasonably high, particularly in major urban centres like Toronto and Vancouver. In these hot markets, home prices have outpaced wage growth for many years.
At the same time, Canada is not a single housing market. Many markets in the Prairie provinces have remained comparatively affordable, with more balanced supply and demand. Some mid-size Ontario cities, as well as Calgary, Edmonton, and most of Atlantic Canada, have reasonably priced real estate relative to local incomes and rents.
How Canadian Real Estate Prices Increased
Canada’s housing costs stem from multiple factors:
Supply and Demand Gap
The biggest driving factor in inflated home prices is that there are not enough homes to meet the demand. Large urban centres experienced massive population growth through immigration and interprovincial migration, but housing construction didn’t keep up. Between high development costs, lengthy approval processes, and supply chain issues, developers were unable to produce adequate housing of the type the buyers need.
Ultra Low Interest Rates
From the 2008 financial crisis through the pandemic, low borrowing costs allowed Canadians and corporate investors to borrow more. During this time, everyone could afford to bid higher, which drove prices up.
Speculative Investments
Foreign and domestic investors have bought heavily in Vancouver, Toronto and other desirable markets. Although federal restrictions have helped to cut down on this, it has had a lasting effect on affordability for home buyers.
Low Profitability for Developers
High development charges, land use restrictions, building codes, and labour shortages all increase building costs. When building affordable housing becomes less profitable due to these expenses, developers focus on luxury units, or they take a pause. Both these responses create a bigger gap between supply and demand.
Short-Term Rental Growth
Platforms like Airbnb resulted in tens of thousands of units being repurposed as short-term housing and vacation rentals. These units then became unavailable to prospective permanent residents.
Current Canadian Real Estate Prices
At the end of 2025, Canadian real estate prices were down 3.7% from 2024 after six months of consecutive decline. However, the national average glosses over huge regional differences.
Looking at the Canadian real estate prices chart published by CREA shows the divergence at a quick glance. Home prices in the Greater Toronto Area fell 3.5% year over year from November 2024 to November 2025, while Vancouver’s high-end properties dropped 6.3%. Meanwhile, markets in Atlantic Canada, the Prairies, and Quebec either held steady or increased slightly.
REMAX Projections for 2026
REMAX projects that in 2026:
- Prices will drop 3.7% nationally due to increased inventory and more balanced market
- Sales will grow 3.4% due to lower prices, falling interest rates and pent-up demand.
- Many markets will shift to balance, with 18% of markets expected to favour sellers and 15% leaning toward buyers.
These predictions could lead to more new buyers. Indeed, according to a Leger survey commissioned by REMAX, 10% of Canadians plan to buy a home within the next 12 months and 17% plan to purchase at some point.
An interesting finding from the Leger survey was that 23% of Canadians said they’d be ready to buy if Bank of Canada rates fell another 0.5% to 1%. If that happens, it could put more upward pressure on Canadian real estate prices.
Regional Variations
Overvaluation varies widely by region and even within regions:
Atlantic Canada
The Canadian real estate market in Atlantic Canada is stabilizing with balanced conditions, moderate price growth, and increasing new construction. Saint John’s, Newfoundland, saw sales increase 4.4% year-over-year. New building developments increased in cities like Moncton, Fredericton, and Truro, making the Atlantic region increasingly attractive.
Western Canada
The picture in Western Canada is mixed, featuring significant regional variation.
Vancouver saw significant drops in luxury property prices, while Calgary and Edmonton have more balanced markets. Regina and Winnipeg continue to be sellers’ markets, due to the lower inventory and steady demand for single-family detached homes.
Ontario
Ontario’s real estate markets feature a blend of buyer-friendly and balanced conditions. Like Western Canada, the real estate market varies widely by region. Northern Ontario remains stable with modest price growth and steady demand, but limited new construction. In mid-sized cities like London, Kitchener-Waterloo, and Simcoe County, there’s more inventory and slower price growth. Toronto saw a slight price decrease year-over-year from November 2024 to November 2025, spurred by increased listings and declining interest rates.
Is 2026 a Good Time to Buy?
This year could be the right time to buy for some families, but there are reasons to wait.
Why to buy in 2026:
- Canadian real estate prices have dropped slightly in some markets and are expected to drop another 3.7%.
- Interest rates have fallen significantly and may decline further.
- Inventory in some markets is up, giving buyers more choice and negotiating power.
- There are new government incentives for first-time buyers.
- Pent-up demand could mean a surge of buyers into the market, which will limit how long the buyer advantage lasts in markets that currently favour buyers.
Reasons to be cautious:
- Trade uncertainty could affect employment and incomes, making it difficult for some potential buyers to qualify for a mortgage.
- Affordability is still a challenge in major markets, despite recent corrections.
- Return-to-office mandates could determine where you’ll need to live.
Canadian Real Estate Prices
Canada’s housing market is not uniformly overvalued. Major urban centres have seen some reductions in prices, but remain very expensive. Mid-size cities in Ontario, some cities in Prairie provinces, and Atlantic Canada all offer better value. Before buying, create a realistic outline of your financial picture, including how much you could afford to spend on a mortgage and housing costs. Most importantly, base your decisions on your needs and your financial picture rather than where you believe prices might be headed.
