Toronto Home Prices in 2026: Could the Market Erase Six Years of Gains and Return to 2020 Levels?

A veteran real estate agent who has worked in the Greater Toronto Area for more than three decades says today’s market mood is starting to resemble the early-1990s housing downturn: cautious buyers, weakening confidence, and prices struggling to find a durable floor.

Dan Cooper, an Oakville-area agent with more than 30 years in the industry, argues the parallels are hard to ignore. In his view, the market has already been sliding in a downward spiral for close to four years — and without a meaningful shift in the economic backdrop, 2026 may not feel much better than the turbulence seen in 2025.

1) Why 2026 could stay difficult: tariffs, job insecurity, and the AI factor

Several observers tie the housing slowdown to persistent economic uncertainty. The past year was shaped by ongoing U.S.-related tariff and trade-war risks, job losses in manufacturing and the auto sector, and rising concerns that AI-driven change could reshape hiring and income stability. Together, these forces have weakened consumer confidence — and confidence is often the fuel that turns “interest” into actual home purchases.

Oxford Economics’ Canada economics director Tony Stillo has highlighted uncertainty as a central constraint on the market: trade-war-driven job-security fears can keep housing conditions unstable for an extended period; meanwhile, a softer labour market and slower population growth can suppress demand while supply remains high — a combination that tends to pressure prices.

2) Rates: variable fell sharply, but further relief looks limited — and fixed rates can move higher

Many buyers assume “rate cuts = cheaper mortgages = a quick rebound.” But the reality is more nuanced. The reporting you provided emphasizes that buyers may not see much additional relief in variable borrowing costs, while fixed-rate pricing could even rise — both of which can reduce affordability and purchasing power.

For context, the GTA’s average selling price in 2020 was about C$929,699, which helps explain why “back to 2020 levels” (roughly C$930,000) is frequently used as a psychological benchmark rather than a random number. Advisor.ca

3) Supply pressure: condos and even freehold listings are competing harder for fewer buyers

Another key headwind is supply. With condo inventory under pressure in particular — and with more sellers competing in a slower market — price cuts can spread from isolated listings into a broader pattern. When buyers are hesitant and days-on-market stretches out, inventory tends to build, and pricing becomes more fragile.

4) Large brokerages turn unusually cautious heading into 2026

The reporting you shared notes that both Royal LePage and RE/MAX Canada project continued price weakness into the end of 2026 in the Toronto region. For an industry that benefits from activity, that tone is relatively rare — and it underscores how challenging the current setup looks.

RE/MAX Canada’s broader 2026 outlook suggests a roughly 3.7% decline in Canada’s average price, with sales expected to rise modestly and with signs of supply building in parts of the country, including Ontario. constructconnect.com
(Important note: national forecasts don’t translate one-for-one to Toronto, but they can reflect the direction of the macro environment.)

5) What “back to 2020” implies: more than 8% additional downside from some reference points

Cooper argues that if the spring market fails to improve, prices could drift back toward pre-pandemic / early-pandemic levels — before the sharp run-up. Using the “2020 level” benchmark around C$930,000, that would imply more than an additional 8% decline from certain recent reference points, and a deeper drawdown could start looking like a “crash” in public perception once declines approach the 30% range.

6) What this means for sellers vs. buyers

For sellers:
Cooper’s advice echoes what many agents said during the 1990s slump: if you truly need to sell in a weak market, listing earlier and aiming to complete a sale before the spring peak can sometimes reduce the risk of chasing the market downward.

For buyers:
Toronto is widely viewed as a buyer-leaning market right now: more choice, more negotiation room, and borrowing costs that have eased from recent highs. But many buyers remain in wait-and-see mode, especially if they believe prices could keep falling — which can keep activity muted even when conditions “look better on paper.”

7) Pre-construction risk and failed closings: from financing gaps to forced sales

Agent Daniel Foch points to another important stress point: he estimates that roughly 22% of pre-construction buyers ultimately fail to close — compared with a more typical 5% to 10% in a “normal” market. The mechanism is straightforward: many buyers committed when rates were much lower during the pandemic-era environment, and some investors bought multiple units. But condos can take roughly five years to complete, and by closing time, rates and carrying costs are often far higher — leaving some buyers unable to qualify or absorb the monthly payments.

Foch warns that bankruptcies, delinquencies, and forced sales could worsen, and he expects this strain to concentrate and potentially bottom out closer to late 2026.