Every housing cycle has a moment where the tone shifts before the data fully shows it. You spot it in the little things first. A listing sits a bit longer than it used to. A brand-new rental building has a few empty units instead of the usual waitlist. A seller who seemed invincible two years ago is suddenly very open to a conversation.
That’s where Canada finds itself heading into 2026. The market hasn’t crashed. It hasn’t frozen. It hasn’t heated back up. It’s doing something we haven’t seen in a long time: it’s easing into something that resembles balance.
For investors, that kind of shift can feel a bit unnerving at first. After a decade of relentless demand and suffocatingly low supply, the idea of “more inventory” feels unfamiliar. But this isn’t a story about oversupply or trouble around the corner. It’s a story about a market that’s finally taking a breath after years of operating in survival mode.
And like most things in real estate, the nuance is where the truth lives.
A Bit More Room — But Still a Shortage Underneath It All
Let’s start with the broader landscape. CMHC’s latest numbers show the national rental vacancy rate rising from 1.5% to 2.2%. Anyone who has been around long enough knows that 2.2% is still extremely tight, but it’s a meaningful departure from the crisis-level vacancy we’ve been living with.
Purpose-built rentals expanded by about 4% year-over-year, marking the biggest jump in three decades. That’s not enough to solve the housing shortage — CMHC continues to warn that Canada needs far more construction than we’re currently delivering — but it does take a bit of pressure off.
Immigration has also shifted. Population growth remains strong, but the massive surge of temporary residents that flooded the market in 2022 and 2023 has been dialed back. That moderation is giving new supply a chance to catch up, at least for the moment.
So we’re not anywhere close to “too much housing.” What we’re seeing is the first stretch of breathing room after years of backlogs, bidding wars, and desperation on both the rental and resale sides.
And how that extra breathing room plays out depends heavily on the city.
Toronto: A Great City Carrying Too Much of One Thing
Toronto is the clearest example of what happens when a single product type dominates construction for too long. For years, developers churned out small investor-oriented condos. Those units rented easily when demand was extreme, but in 2026 they’re stepping into a different world.
Many of these buildings completed at roughly the same time. The assignments market is crowded. New purpose-built rentals — often better laid out and better designed for actual living — are competing directly with investor condos in the same neighbourhoods.
None of this means Toronto is soft. Far from it. The city still benefits from strong job growth, a huge student base, and long-term population demand. But it does mean that investors who own or are thinking about buying small downtown condos need to approach 2026 with more strategy and less assumption.
The city didn’t build too much housing. It built too much of the same housing.
The winners in Toronto right now?
Larger units, well-run older buildings, and anything that offers real livability instead of just a square footage badge.
Vancouver: Breathing Room Without Losing Strength
Vancouver usually lives in extremes, so the fact that it’s feeling slightly more balanced is noteworthy on its own.
Vacancy is up, but still low by any reasonable standard. Rent growth has tempered, but not collapsed. Developers are finishing projects that have been in the pipeline for years, which is finally giving renters and buyers a bit more choice.
But the core fundamentals haven’t changed. Vancouver’s geography limits expansion. Demand for city living remains solid. And it would take far more than one wave of completions to undo decades of underbuilding.
The area that deserves a closer look are the high-end suites and certain pre-sale products that depended heavily on perfect conditions to make the numbers work. Those units have more competition around them now, and 2026 won’t be as forgiving as the earlier years.
Meanwhile, the average renter — the person looking for a real home, not a speculative box — still faces a tight market. Investors who focus on practical, well-maintained, well-located rentals still have strong footing.
Calgary: A Rare Case of a City Growing Fast and Building Fast Enough to Meet It
Calgary continues to be one of the more fascinating markets in the country. It’s benefitted from years of interprovincial migration, driven mainly by affordability, job opportunities, and lifestyle. For a while, the rental market was running so hot that vacancy was almost nonexistent.
Builders stepped up. Purpose-built rentals exploded in number. And now, those buildings are hitting the market.
Vacancy will tick up. Lease-ups will take longer than they did in 2022 and 2023. But Calgary’s demand story hasn’t gone anywhere. Jobs are still being created. People are still moving in. Rents are still significantly more affordable than in Toronto or Vancouver.
The city isn’t swinging from shortage to oversupply. It’s shifting from chaos to order. And for investors who know how to manage their product and price it sensibly, Calgary remains one of the most promising long-term plays in the country.
Edmonton: The Most Rational Big City Market Right Now
Edmonton doesn’t get the national attention that Toronto or Vancouver do, but it’s quietly developed some of the strongest fundamentals for investors.
There’s a meaningful amount of new rental supply, but so far the city has absorbed it surprisingly well. Vacancy is rising, but still at a level most landlords in Ontario would envy. Population growth is steady. Job creation is diverse and improving. And affordability is a major draw for renters and buyers alike.
Investors who focus on cash flow often find Edmonton refreshing because the numbers aren’t built on hope — they’re built on actual rents that support actual mortgages.
The one caution here is for older buildings that haven’t kept up with modern expectations. In a market where renters actually have choices, finishes, cleanliness, and responsiveness matter. Edmonton is no exception.
Ottawa & Montreal: Construction Everywhere, but the Foundation Still Holds
Both Ottawa and Montreal have seen significant rental construction over the past few years, and in certain pockets you’ll feel it — especially downtown or near metro stations where multiple towers are completing at the same time.
But the fundamentals in both cities remain sturdy.
Ottawa has a stable government-driven job base, strong student demand, and limited affordable ownership options, which keeps renters in the market longer. Montreal has one of the highest renter populations in Canada, a deep pool of students and newcomers, and a long-term supply shortage that new construction has barely dented.
The competition in these cities is local, not citywide. A cluster of new buildings can temporarily cause a slowdown on one street while the rest of the city still faces tight conditions.
Investors here succeed not by buying “Montreal” or “Ottawa,” but by buying the right micro-location.
The Prairies: Slow, Steady, and Predictable
Winnipeg, Saskatoon, Regina — these cities don’t swing wildly in either direction, and that’s exactly why many investors like them.
Vacancy rates in the mid-single digits are normal here. Rent growth is modest but predictable. Construction generally reacts to real demand instead of speculation. And affordability keeps people rooted rather than chasing cheaper options across the country.
If you’re looking for long-term cash flow without the drama of a boom-and-bust cycle, the Prairies are worth a serious look in 2026.
Atlantic Canada: Cooling from Red-Hot, Not Cooling Off Entirely
Halifax and the broader Atlantic region saw some of the strongest population growth in the country during the pandemic years. That momentum has eased, but the fundamentals are still stable. New projects are finishing. Vacancy has nudged up. Rents aren’t jumping the way they were.
But these markets were significantly undersupplied for years. Even with new inventory arriving, they’re still far from balanced.
Think of Atlantic Canada as a market that’s settling into a healthier rhythm, not losing momentum.
So What Does This All Mean for Investors in 2026?
The frenzy is over, and what replaces it is clarity.
Investors now have time to evaluate deals properly. Tenants have enough choice to push landlords to offer better housing. Sellers can’t lean on automatic appreciation. Developers can’t rely on instant lease-ups.
This is the phase where skill starts to matter again.
If you’re disciplined with your underwriting, thoughtful about what tenants actually want, and selective about where you buy, 2026 offers more opportunity than the last four years combined.
If you ignore the fundamentals and hope the market will save you, this is the year reality taps you on the shoulder. Either way, the market is finally moving in a direction where smart, patient investors can thrive — and that’s something we haven’t been able to say in a long time.
