Two Forecasts Say Ontario Housing Steadies in 2027: What Buyers Should Plan For

What the two forecasts actually say

Two economists, speaking in the same week, landed in a similar place on Ontario and Canadian housing next year: weak, but steadier than 2026.

On 21 October, Canadian Mortgage Trends carried The Canadian Press report on a new Desjardins forecast. Senior economist Kari Norman called Ontario’s housing sector “in the midst of a striking contradiction”: the market is weak, even though affordability, buyer choice and rental conditions have all improved.

• Sales: existing-home sales are forecast to rise nearly 5% in 2027, helped by lower prices, rising incomes, first-time buyer supports and some pent-up demand. Activity would still sit well below long-term norms.
• Prices: balanced market conditions point to average price growth of 2.4% next year.
• Building: Ontario housing starts are projected to rise about 6% to nearly 65,000 units, still more than 30% below 2021 and 2022 levels, led by rental construction.
• Rents: average rents are forecast to rise around 1.4%, even though asking rents have been declining.

A day earlier, Canadian Mortgage Trends reported remarks by National Bank chief economist Stéfane Marion at Mortgage Professionals Canada’s conference in Calgary. He expects national home prices to stabilize heading into 2027 after a decline of about 4% in the composite index this year, and said population growth has dropped from roughly 1.2 million a year to about 200,000.

The catch both reports share

Neither forecast is a story of cheap borrowing returning. Norman said the backdrop “will likely remain challenging,” that she expects two near-term Bank of Canada increases, and that higher costs “feed directly into” variable-payment mortgages. The Bank’s overnight target has been 2.25% since October 2025, according to the same report.

Marion was more hopeful on direction. He told the conference he thinks mortgage pricing looks “top-ish” and does not expect another full percentage point of increase, while noting that his outlook still allows for three Bank hikes. He also said five-year fixed pricing has reached its highest level since 2024 and that five-year terms now make up less than 20% of outstanding mortgages.

Cheaper homes, but not a cheaper payment

Norman’s point is worth holding onto: home prices are down while household incomes have risen, which helps a buyer’s starting position, but higher borrowing costs can give a good part of that back. Marion went a step further, arguing that affordability can no longer be restored mainly through further price declines in markets such as Hamilton, where prices have already fallen roughly 23% from their 2022 peak, and will depend more on income growth.

For an Ontario buyer, that means the price on the listing is only one input. The payment, the stress test and the cash needed at closing matter as much. The mortgage calculators let you test the same purchase at today’s terms and at a higher setting, and the stress test explainer shows why a lender checks your file against a higher figure than the one you will pay.

What this means in Waterloo Region and southwestern Ontario

Both forecasts are provincial or national. Marion himself said “there’s no such thing as a national market for the housing sector.” Neither report breaks out Waterloo Region or London, so treat them as context rather than a prediction for your street.

For local figures, the monthly board releases are the better guide, and we summarize them on our Waterloo Region and London and Middlesex pages. Lending is provincial rather than local, so the same approach applies in Stratford, Sarnia, Woodstock or Chatham as in Kitchener.

How to use a forecast without betting on it

• Test two payments, not one. Check your budget at today’s terms and at a noticeably higher setting. If the second one breaks your month, the structure is too tight whatever the forecast says.
• Match the term to how long you expect to stay. Marion’s point that borrowers are shifting to shorter terms is a reminder that a term is a choice about flexibility, not only about cost.
• Keep the closing-cost line honest. Lower prices do not shrink land transfer tax, legal fees or moving costs by the same proportion.
• First-time buyers: Desjardins lists policy supports as a driver of 2027 sales. Our First Home Hub covers the FHSA, the Home Buyers’ Plan and regional assistance, and each has its own rules.
• Planning to move later? The Next Home Hub covers porting and bridge financing.