What’s next for the Canadian housing market, according to our reporters

The key market implication is not “housing is weak,” but that the weakest link is now the investor-funded condo financing stack. When marginal buyers vanish, developers lose pricing power, but they also lose presale velocity needed to unlock construction loans, which can turn a demand slump into a supply drought 12–24 months out. That creates a bifurcated setup: near-term price concessions on existing inventory, followed by a medium-term shortage in the very product class that is easiest to finance only when sentiment is strong.

The second-order beneficiary is the rental market, especially in cities where ownership demand is getting pushed out by affordability and uncertainty. If preconstruction stays impaired, households that would have “graduated” into ownership remain renters longer, which supports rent growth even if home prices drift lower. That matters for banks and lenders more than headline price indices suggest: weaker condo collateral, higher carrying costs on investor-owned units, and slower turnover pressure loan growth quality before it shows up in reported delinquencies.

Rates are the swing factor, but the bigger surprise risk is that the market could reprice upward if inflation reaccelerates while growth slows. In that scenario, fixed mortgage spreads can widen even without a policy hike, which would keep transaction volume depressed longer than consensus expects. The consensus seems to be underestimating how persistent the “wait-and-see” psychology can be once buyers believe they’re subsidizing a falling market and sellers are anchored to yesterday’s peak.