Fifteen-plus years of BC mortgage experience, distilled into practical writing on buying, renewing, refinancing, and building wealth through real estate.
CMHC's 2026 Forecast Calls the Bottom Wrong: Why Waiting for Lower Prices Could Cost You More
Housing starts in the Greater Toronto Area fell 22% year-over-year in the final quarter of 2025. That number, buried in a CMHC regional supplement, tells you more about the next three years than any forecast about prices dropping in 2026.
The narrative right now is simple: wait it out. CMHC says prices are heading down. Interest rates are still elevated. Population growth is cooling as Ottawa caps non-permanent residents. The obvious move, if you believe the headlines, is to sit tight until the market bottoms and rates fall further.
The problem with that logic is it ignores what happens when supply stops arriving.
The supply cliff nobody's pricing in
Residential construction doesn't pause and then restart like a Netflix subscription. A project that doesn't break ground in 2025 or 2026 because financing costs are too high and pre-sales are soft becomes a unit that doesn't exist in 2028. Developers are not stockpiling approvals waiting for better conditions. They are walking away.
Canada needs roughly 3.5 million additional housing units by 2030 to close the deficit accumulated over the past decade. That's the CMHC's own estimate. We are currently moving in the opposite direction. Starts are declining. Projects that were borderline viable at 3% rates are now uneconomic at 5%. Even if demand is cooling today, that deficit doesn't evaporate. It sits there, latent, waiting for the moment conditions improve even slightly.
The buyers stepping back now, waiting for a 5% price correction or another quarter-point rate cut, are creating the exact conditions that ensure prices spike the moment sentiment shifts. Because when those buyers return, there will be fewer completed units waiting for them than there are today.
The mortgage math is worse than it looks
Let's say you're targeting a property listed at $750,000 in Mississauga. CMHC's forecast suggests it might fall to $720,000 by mid-2026. You save $30,000 by waiting. Sounds smart.
But rates aren't static. If the Bank of Canada holds or cuts slowly, you're still qualifying under the stress test at roughly 7%. A household income of $140,000 can service about $520,000 in mortgage debt at that rate. If you're stretching to $600,000, the stress test is the binding constraint, not the purchase price. Waiting for a small nominal price drop doesn't expand your borrowing capacity. It just means you're competing for the same narrow band of properties with everyone else in the same income bracket.
Meanwhile, fixed-rate renewals are hitting. Roughly 900,000 Canadian mortgages renewed in 2025, most at rates 200 to 300 basis points higher than their previous terms. Those households didn't default. They extended amortizations, cut discretionary spending, or renegotiated with their lender. What they didn't do, in meaningful numbers, is sell at a loss and flood the market with distressed inventory. The "mortgage cliff" turned out to be a mortgage slope.
The regional mismatch
Not all of Canada is cooling equally. Vancouver's detached market is seeing price compression. Toronto condos are sitting longer on market. But Kitchener, Hamilton, and London are holding steadier because buyers priced out of the core have already migrated. The CMHC forecast is a national average. Averages hide more than they reveal.
If you're waiting for a crash in a secondary market that's affordable relative to Toronto, you're waiting for something that has no structural reason to happen. Those markets didn't overshoot the way the GTA did in 2021 and 2022. They just normalized to their actual demand base.
The psychological anchoring is the real trap. Sellers are anchored to 2022 prices. Buyers are anchored to 5% mortgage rates that may never return. The result isn't a correction. It's a stalemate where transaction volume collapses and nothing moves. Low sales don't mean affordability improved. They mean the market froze.
You don't time the bottom of a housing market by waiting for a number. You time it by looking at what's being built, who's still building it, and what happens when they stop.
Housing starts in the Greater Toronto Area fell 22% year-over-year in the final quarter of 2025. That number, buried in a CMHC regional supplement, tells you more about the next three years than any forecast about prices dropping in 2026.
The narrative right now is simple: wait it out. CMHC says prices are heading down. Interest rates are still elevated. Population growth is cooling as Ottawa caps non-permanent residents. The obvious move, if you believe the headlines, is to sit tight until the market bottoms and rates fall further.
The problem with that logic is it ignores what happens when supply stops arriving.
The supply cliff nobody's pricing in
Residential construction doesn't pause and then restart like a Netflix subscription. A project that doesn't break ground in 2025 or 2026 because financing costs are too high and pre-sales are soft becomes a unit that doesn't exist in 2028. Developers are not stockpiling approvals waiting for better conditions. They are walking away.
Canada needs roughly 3.5 million additional housing units by 2030 to close the deficit accumulated over the past decade. That's the CMHC's own estimate. We are currently moving in the opposite direction. Starts are declining. Projects that were borderline viable at 3% rates are now uneconomic at 5%. Even if demand is cooling today, that deficit doesn't evaporate. It sits there, latent, waiting for the moment conditions improve even slightly.
The buyers stepping back now, waiting for a 5% price correction or another quarter-point rate cut, are creating the exact conditions that ensure prices spike the moment sentiment shifts. Because when those buyers return, there will be fewer completed units waiting for them than there are today.
The mortgage math is worse than it looks
Let's say you're targeting a property listed at $750,000 in Mississauga. CMHC's forecast suggests it might fall to $720,000 by mid-2026. You save $30,000 by waiting. Sounds smart.
But rates aren't static. If the Bank of Canada holds or cuts slowly, you're still qualifying under the stress test at roughly 7%. A household income of $140,000 can service about $520,000 in mortgage debt at that rate. If you're stretching to $600,000, the stress test is the binding constraint, not the purchase price. Waiting for a small nominal price drop doesn't expand your borrowing capacity. It just means you're competing for the same narrow band of properties with everyone else in the same income bracket.
Meanwhile, fixed-rate renewals are hitting. Roughly 900,000 Canadian mortgages renewed in 2025, most at rates 200 to 300 basis points higher than their previous terms. Those households didn't default. They extended amortizations, cut discretionary spending, or renegotiated with their lender. What they didn't do, in meaningful numbers, is sell at a loss and flood the market with distressed inventory. The "mortgage cliff" turned out to be a mortgage slope.
The regional mismatch
Not all of Canada is cooling equally. Vancouver's detached market is seeing price compression. Toronto condos are sitting longer on market. But Kitchener, Hamilton, and London are holding steadier because buyers priced out of the core have already migrated. The CMHC forecast is a national average. Averages hide more than they reveal.
If you're waiting for a crash in a secondary market that's affordable relative to Toronto, you're waiting for something that has no structural reason to happen. Those markets didn't overshoot the way the GTA did in 2021 and 2022. They just normalized to their actual demand base.
The psychological anchoring is the real trap. Sellers are anchored to 2022 prices. Buyers are anchored to 5% mortgage rates that may never return. The result isn't a correction. It's a stalemate where transaction volume collapses and nothing moves. Low sales don't mean affordability improved. They mean the market froze.
You don't time the bottom of a housing market by waiting for a number. You time it by looking at what's being built, who's still building it, and what happens when they stop.
Read Next
Brokers Who Think the Filogix Acquisition Changes Nothing Are Missing the Strategic Shift
DLC didn't buy Filogix to own the rails, it bought it because the rails were already failing
A Toronto Townhouse Project Built 147 Units and Can't Sell 65 of Them
MCAN's 19% earnings jump hides a rising impairment problem