RBC, once confident that real estate would stabilize smoothly after the rate hikes, is now adjusting its tone—predicting a choppy recovery with regional turbulence ahead.
According to RBC’s latest housing report, home sales should gradually recover over the next year, but the path forward won’t be smooth. The bank sees the national market regaining momentum—except in Toronto and Vancouver, where prices are expected to continue falling as inventory builds.
📉 Canadian Home Sales Stumble—Confidence Wavers
After several months of steady gains, national home sales slipped 1.7% in September, the first decline since spring. It’s a signal that confidence is fragile and the market recovery is anything but linear.
RBC’s Assistant Chief Economist Robert Hogue explained that lower interest rates and—yes—lower prices could reignite demand in the coming months. Still, RBC admits it could take more than a year for the market to feel “normal” again.
At Lendworth, we’re seeing the same thing on the ground: buyers are circling, but still cautious. Many are waiting for rates to drop further or for sellers to blink first.
🌊 Choppy Waters Ahead: The “Soft Landing” Narrative Weakens
Earlier this year, RBC was among the loudest voices predicting a soft landing. Now, the tone is shifting. The bank warns that economic uncertainty, labour market softening, and stretched affordability could keep volatility alive through 2026.
External shocks—like potential new U.S. tariffs—could also rattle consumer sentiment and delay recovery. In short: lower rates may boost activity, but not without risk.
Here’s the catch—lower interest rates often signal weaker consumer confidence. It’s a strange mix of optimism and caution that could keep both buyers and sellers guessing well into next year.
🏙️ Toronto & Vancouver: More Pain Before Progress
RBC’s forecast is especially bearish for Toronto and Vancouver, where high prices and a flood of new completions are expected to push inventory—and competition—higher.
The logic is simple: more supply, weaker demand, falling prices. RBC expects further declines in these two markets, even as smaller cities show surprising resilience.
That’s a notable shift. The country’s biggest and most expensive markets—once the engine of Canada’s housing boom—are now the biggest drag on national averages.
🌾 Prairies & Atlantic Canada: A Tale of Two Markets
Outside of Ontario and B.C., RBC sees stability—or even small gains. The Prairies, Quebec, and Atlantic Canada are still benefiting from affordability and population inflows.
But the logic isn’t perfect. Halifax condo prices, for example, have soared nearly 90% since 2020—approaching Toronto valuations. If that trajectory continues, the “affordability advantage” disappears fast.
Historically, housing booms have radiated outward from Toronto and Vancouver, fueled by investor capital and easy credit. When those markets cool, smaller regions tend to follow. So while the East Coast may hold steady for now, cracks could appear later if national demand weakens.
💡 Lendworth’s Take: Volatility Creates Opportunity
At Lendworth, we believe volatility isn’t just risk—it’s opportunity.
Periods like this test the fundamentals of the housing market and reward disciplined lenders and investors who focus on security, equity, and real value. As traditional lenders tighten and consumers adjust to new price realities, private capital will play a critical role in bridging the gap.
The Canadian housing market isn’t collapsing—it’s recalibrating. And in that recalibration lies room for smarter, more flexible financing solutions.
📊 Final Thought
RBC’s forecast may not be perfect—but it’s right about one thing: recovery won’t be linear.
Toronto and Vancouver may still have further to fall, but across the country, demand is quietly rebuilding as affordability improves. Whether you’re a borrower, investor, or developer, the next 12 months will separate speculation from strategy.
At Lendworth, we’ll be on the right side of that line.
Lendworth Mortgage Investment Corporation
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