Home Prices Are Back to 2016 Levels After Inflation. Why That Does Not Mean Buying Is Easier

What the data shows

Two things are true at once: prices ticked up last quarter, and in real terms they are at their lowest in nearly a decade.

According to Better Dwelling, analysing quarterly data from the Bank for International Settlements (BIS), Canadian home prices rose 0.78% in the second quarter of 2026, the first quarterly increase in a little over a year. Prices are still 3.97% lower than a year earlier and 19.50% below the record high, which Better Dwelling says puts them back at 2021 levels in nominal terms.

Adjust for inflation and the picture is weaker. Real prices fell 0.87% in the quarter, a fifth consecutive quarterly decline, and are 6.72% lower than a year earlier. Better Dwelling reports the 19.50% nominal drop from peak becomes a 29.93% drop once adjusted for purchasing power, which it says puts real prices roughly where they were in 2016.

Purchasing power is not affordability

A real price is the price in dollars adjusted for what dollars buy. If real prices are at 2016 levels, then relative to the general price level, the average home costs about what it did then. What it leaves out is who is buying it and how they are paying.

Better Dwelling points to a Bank of Canada paper, which we covered in a separate piece, finding that while average incomes have beaten inflation, the bottom 60% of households by disposable income did not see incomes rise enough to offset living costs. It also notes an RBC survey, which we looked at in our piece on parents subsidizing adult children, reporting that many parents now help adult children with basic living costs.

The implication is that a lower real price does not translate into a bigger buyer pool if the households who would be buying are stretched elsewhere. Sales have stayed slow: Bloomberg, reporting a Bank of Canada speech, cited a seasonally adjusted 37,738 sales in August, below historical averages for years.

Why the payment is what you feel

A mortgage is paid in nominal dollars. Inflation helps a borrower by eroding the real value of a fixed debt over time, but only after the fact. On the day you buy, what you have to qualify for is the payment at current borrowing costs, and that is the number that decides whether a home is within reach.

Better Dwelling also argues that policy has leaned on expanding borrowing capacity, citing the insured price cap rising to $1.5 million and the gross debt service ceiling rising over the decades. Whether that helps is a view, not a fact we can verify. What a buyer can verify is their own numbers: the stress test, your debts and your down payment. Our calculators and pre-qualification tool are built for that.

The Ontario picture

For an Ontario-specific number, the Toronto Region Board of Trade reported this week, through Canadian Mortgage Trends, that between 2006 and 2025 Toronto-area home prices rose around 187% against roughly 51% cumulative inflation. That is a different window from the 2016 comparison, and the figures should not be set side by side as if they were the same measure.

Both can hold: prices well above inflation over twenty years, and near 2016 levels in real terms after the recent correction. Our earlier look at Ontario affordability covers the income side.

What to take from it

• Do not read it as a signal. A real-price milestone is not a forecast, and neither a buy nor a wait instruction.
• Work from your own numbers. Income, debts, down payment and the payment you can carry at renewal decide the question.
• First-time buyers have programs to check. The First Home Hub covers the FHSA, the Home Buyers’ Plan and down payment rules.