TD Cuts Its Housing Outlook: What Flat Ontario Prices Mean for Buyers and Owners

What TD changed

TD Economics has lowered its outlook for Canadian housing. In a provincial outlook dated 29 September 2026, economist Rishi Sondhi writes that higher bond yields are likely already weighing on the market, with sales declining in August for the first time in six months.

The headline numbers, as reported by Canadian Mortgage Trends and set out in TD's own Provincial Resale Market Outlook:

• Canadian home sales are tracking a decline of about 5% this year, and TD says they are unlikely to recover that lost ground in 2027.
• Average home prices are expected to be roughly flat this year, then to rise at a pace below 2% next year.
• TD raised its forecast for the 5-year Government of Canada bond yield to an average of 3.60% in the third quarter and 3.50% in the fourth, up from 3.00% and 2.95% in its June forecast.
• The outlook assumes the Bank of Canada holds its policy setting through 2027, with underlying inflation near target and oil prices easing gradually.

One more detail matters. TD says its modest recovery depends on bond yields beginning to drift lower in the fourth quarter and continuing through next year. If that does not happen, the forecast would need to change again.

What it says about Ontario

On Ontario specifically, TD expects sales to rise in 2027 after this year's declines, helped by pent-up demand. It describes Ontario and British Columbia as markets that are currently heavily skewed in favour of buyers, and says rising sales should gradually rebalance them so prices can stabilize after the pullbacks seen in 2026.

TD expects average price gains of less than 1% in both provinces next year, constrained by weak population growth. It forecasts firmer price growth in Alberta, about 3% this year and next.

That sits alongside what we have already covered here. National sales fell in August, as we looked at in August Home Sales Fall: What a Softer Ontario Market Means for Buyers, and another bank's outlook, covered in our look at the RBC outlook, also pointed to a slow recovery rather than a sharp one.

Why bond yields are in the story

Fixed mortgage borrowing costs are priced off government bond yields, not directly off the Bank of Canada's policy setting. That is why TD's housing downgrade follows a bond-yield upgrade. Even with the central bank on hold, a higher bond yield keeps fixed mortgage costs elevated and, in TD's view, restrains demand.

We unpacked that link in our piece on the long-bond auction. BMO's chief economist, Douglas Porter, noted this week that Canadian yields have risen less than U.S. ones since the end of August, up 20 basis points against 53 for the U.S. 10-year, according to Canadian Mortgage Trends. Two forecasters can read the same yield move differently, which is one reason to treat any single forecast with care.

What a forecast like this can and cannot do for a buyer

A softer market can mean more choice and more room to negotiate. It does not change what a lender will approve you for. Approval still comes down to your income, debts, down payment, credit and the stress test, and a lender's financing terms can move while you shop.

If you are weighing a purchase, the more useful questions are your own:

• What monthly payment can you carry comfortably if borrowing costs stay where they are, and what if they are higher at your next renewal?
• How long do you plan to stay? A short hold is more exposed to price swings than a long one.
• Have you left room for closing costs and a cushion, beyond the down payment?
• Do you have a pre-approval, and do you understand what it does and does not commit a lender to? Our explainer on what a pre-approval actually is covers it.

A broker can model these on your own numbers. The TFC mortgage calculators are a reasonable place to start, with payments worked out the Canadian way, compounding semi-annually for fixed terms.

If you already own

Flat prices mostly matter to owners at two moments: when you sell and buy again, and when your mortgage renews. If you are planning a move, the gap between what you sell for and what you buy at is what counts, and our Next Home Hub walks through buying and selling in sequence.

If your term is ending, bond-yield-driven pricing is already part of the picture. Know your renewal date, start comparing options inside the 120-day window, and read what your lender can and can't do in it. The full renewal picture is on our Mortgage Renewal page.

The caveats

TD's own report is explicit that its views may change and may not come to pass. A bank economics team also publishes national and provincial averages, and a market as varied as Ontario's, from Waterloo Region to London to the GTA, will not move as one. Local conditions are better read from the local board's figures, which we cover when they are published.