Ontario's housing recovery is a 2027 story, not a 2026 one

What the forecast actually says

RBC Economics published its mid-year outlook for Canadian housing on 1 September, and the headline is a two-part one: this year finishes down, next year turns. The turn arrives too late to rescue 2026.

For the country as a whole, RBC projects resales to end 2026 down 3.6%, at roughly 453,200 transactions, with the benchmark price index off 2.3% to about $794,200. Its 2027 forecast has transactions recovering 6.7% to roughly 483,600, and the benchmark value nudging up 0.8% to about $800,700.

Read those four numbers together and the shape is clear. The rebound RBC describes is a return to a soft market, not a hot one. Its own framing is that transaction volumes stay well under where they sat before the pandemic, and that home values end 2027 only marginally above the bottom of the cycle. Nobody is forecasting a boom.

The mechanism RBC points to is pent-up demand. It estimates that household formation in Canada has been running short by more than 400,000 households since 2019 — people who would ordinarily have moved out, moved up or moved down and did not. Its argument is that improving affordability, a firmer job market and simply the passage of time bring a growing share of those people back.

The Ontario numbers, and why they look worse before better

Ontario has had the longest correction of any province, and RBC's provincial table shows it. Its forecast has Ontario transactions slipping 0.5% across 2026 — essentially flat — then rising 8.2% in 2027, the strongest provincial rebound in the report. Home values, measured on the RPS Home Price Index, are forecast to edge up 0.7% next year, which would be Ontario's first annual increase in two years.

British Columbia follows a similar path in the forecast: transactions down 4.6% this year, up 7.8% next, with values up 0.5%. The two provinces that fell hardest are the two RBC expects to recover fastest, from a base that RBC itself describes as the worst affordability on record.

It is worth being precise about what a 0.7% forecast means for a homeowner. On a $700,000 Ontario property that is roughly $4,900 over a year, which is inside the noise of any individual sale. The value in the number is directional, not arithmetic: it says RBC expects the floor to be in, not that anyone should count on a specific figure.

The provinces that held up through the correction get the mirror image. RBC has price growth slowing next year in Saskatchewan, Manitoba, Quebec and much of Atlantic Canada as inventory rebuilds, with Alberta the outlier that keeps a bit of momentum. The national gap between the strong regions and the weak ones narrows from both directions.

The line in the report that matters most to a borrower

Buried in the middle of the outlook is the sentence with the most direct bearing on anyone financing a home: RBC does not expect borrowing costs to provide any further help. Its view is that they are as low as they will get this cycle.

Two things drive that. Long-term borrowing costs in Canada follow the bond market, and RBC sees upward pressure on global yields feeding through here, with mild further increases running to the end of 2027. And it expects the Bank of Canada to stay on hold for the rest of this year, then begin tightening in 2027 as growth firms up.

This connects to the household side of the forecast in a way worth noticing. RBC's case for recovery leans on buyers who are financially ready — Canadians saving at close to a 25-year high, and people aged 25 to 34 employed at an above-average level. Those are households with deposits assembled and income to qualify on. If borrowing costs are flat to rising while that group comes off the sidelines, the competitive pressure in 2027 is on the buying side, not on pricing.

Condominiums are on a different clock

RBC separates the condominium segment out, and it does not share the timeline. Its expectation is that heavy inventory in the Toronto and Vancouver areas, together with investors who are simply not interested at the moment, keeps downward pressure on condominium values possibly into 2027.

For a first-time buyer in Waterloo Region, Hamilton or the GTA, that is not automatically bad news — a segment that keeps softening while the rest of the market turns is a segment where the negotiating position improves. It does matter for the financing conversation, though. Lenders look at a building, not only a unit: status certificate, reserve fund, the share of the building that is rented, and whether the appraisal supports the price.

It matters more if you already own one and are planning to move up. RBC's forecast implies the sale side of a move could stay difficult while the purchase side gets more competitive. That is the exact situation bridge financing exists for, and it is the one most worth planning early rather than discovering at the offer stage.

What to actually do with a forecast

RBC is careful about its own confidence, and so should anyone reading it be. The report counts four false starts since 2023, each one derailed by something external, and it names the candidates that could do it again: an escalation in the trade dispute with the United States, conflict in the Middle East, deeper immigration cuts. Its own description of the path ahead is uneven — two steps forward, one back, with regions moving in different directions at the same time.

So the useful response is not to pick a date. It is to make the decision you already face robust to being wrong about the timing:

• If you are renewing in the next year. RBC's view that costs have bottomed argues for starting the renewal conversation early rather than at the 30-day mark. The 120-day window exists so you can hold a commitment while you look.
• If you are buying. Qualify on what the stress test requires, not on what the payment would be if the forecast is right. A forecast is not a lending assumption.
• If you are moving. Sort out the gap between the two closings before you list, particularly if you are selling a condominium. Certainty about the financing is worth more than certainty about the market.
• If you are staying put. A flat forecast for values is a reason to look at what the equity you already have could do, rather than waiting for a number to move.

None of that depends on RBC being right. That is the point of it. The households who came through the last three years best were not the ones who called the turn — they were the ones whose plan still worked when the turn did not arrive on schedule.