TD Economics Revises 2026 Housing Forecast

Stewart Blair

1 month ago

TD Economics Revises 2026 Housing Forecast

What It Means for London, Ontario

A Reset Year for Canada’s Housing Market

A newly revised outlook from TD Economics is changing expectations for the Canadian housing market in 2026.

After initially predicting a strong rebound, TD now forecasts a 1.8% decline in home sales across Canada, with average home prices falling slightly by 0.3%. This marks a significant change from earlier forecasts that predicted substantial growth this year. Instead, 2026 appears to be a transition year, with the recovery expected to take place in 2027.

Why the Recovery Is Taking Longer

The slower-than-anticipated recovery is due to a mix of economic and behavioural factors.

Affordability remains tight, especially in Ontario and British Columbia, as ongoing cost-of-living pressures continue to strain household budgets. Meanwhile, economic uncertainty is prompting many buyers to adopt a more cautious stance. Most notably, pent-up demand has not rebounded as quickly as anticipated.

Even with interest rates stabilizing, TD suggests they will act more as a neutral influence in 2026 than as a catalyst for renewed activity.

Broader trends are also impacting the market. Population growth has slowed in major provinces, rental markets are softening in certain areas, and investor activity has decreased.

“We’re seeing a market where the fundamentals are stabilizing, but confidence hasn’t fully returned yet. Buyers are active, but more deliberate.”
— Elevate Real Estate Group

TD Economics Revises 2026 Housing Forecast

Ontario Faces One of the Steepest Adjustments

Ontario is expected to experience some of the most significant changes in 2026.

Home sales are expected to decrease by 3.2%, while average home prices are likely to decline by about 4%. These changes reflect ongoing affordability issues, high inventory levels in certain segments, and a rising belief among buyers that waiting could lead to better opportunities.

The GTA condo market continues to stand out as one of the weakest segments, with a significant amount of supply still needing to be absorbed before prices stabilize.

What This Means for London and Southwestern Ontario

While national headlines often highlight Toronto and Vancouver, the impact on London and Southwestern Ontario is both significant and unique.

According to TD’s regional analysis, Southwestern Ontario is shifting towards more balanced market conditions. Sales-to-new-listings ratios suggest less competition than in recent years, giving buyers more opportunity to negotiate and make informed choices.

Practically, homes are taking longer to sell, and the urgency that characterized previous markets has diminished. Buyers now have more time to assess properties, carry out inspections, and include conditions in their offers.

At the same time, pricing has become increasingly important.

“We’re seeing more listings sit, not because demand isn’t there, but because pricing hasn’t fully adjusted to current conditions.”
— Elevate Real Estate Group

For buyers, this change offers a real opportunity. There is less competition, more inventory to choose from, and increased flexibility in negotiations. For sellers, however, the environment calls for a more thoughtful and strategic approach. Proper pricing, strong presentation, and effective marketing are now essential for success.

“This isn’t a market where you can rely on momentum. It’s a market where preparation and positioning make the difference.”
— Elevate Real Estate Group

A Market Defined by Regional Differences

One of the most important takeaways from the TD report is that Canada’s housing market is no longer moving in one direction.

Ontario and British Columbia are experiencing softer conditions and affordability challenges, while Prairie markets such as Alberta benefit from stronger population growth and demand. In parts of Atlantic Canada, price growth continues due to tighter supply conditions.

This growing regional divide reinforces an important point: housing is increasingly a local story.

For London, this means that while broader trends, especially from the GTA, influence the market, local factors such as employment, migration patterns, and relative affordability remain important.

Looking Ahead: Why 2027 Matters

TD’s outlook suggests that 2026 will be a year of adjustment, with a more meaningful rebound expected in 2027.

Home sales are forecasted to rise by 9.6%, while prices are expected to increase by 2.7%. This recovery will likely be supported by improved economic conditions, a stronger job market, and renewed buyer confidence. Affordability gains from price adjustments in 2026 may also help attract buyers back into the market.

The Big Picture: A Market in Transition

The key takeaway from this forecast is not that the housing market is weakening, but that it is rebalancing.

After years of rapid price growth, intense competition, and limited supply, the market is shifting toward more balanced conditions. Buyers are more informed and selective, while sellers must adapt to a more competitive landscape.

What This Means for You

Whether you are buying or selling in London in 2026, the approach needs to reflect today’s conditions, not yesterday’s.

Buyers now have more leverage and time to make thoughtful decisions, while sellers need to focus on pricing, positioning, and understanding current market dynamics.

Final Thought: Timing vs Strategy

Trying to perfectly time the market is difficult — even for economists.

What matters most is understanding current conditions, aligning decisions with your goals, and working with a strategy that reflects where the market is today.

“Success in this market isn’t about guessing what happens next — it’s about making informed decisions based on where we are today.”
— Elevate Real Estate Group