Where Is Waterloo Region Real Estate Trending In 2026?
A Note From The Brokerage:
Is it safe to say that the start of 2026 is looking a lot like 2025? We Canadians, hopeful for a little more certainty, eager for a fresh start in the New Year, are instead greeted with trade upheaval, geopolitical uncertainty, and threats of annexation looming across the Western Hemisphere. Not exactly ideal.
There is one word that has been circulating regularly in Canadian economic reports: “uncertainty”. That has also applied to the residential real estate market, with 2025 representing some of the lowest Ontario sales volume in 25 years.
There is a second word worth considering: ‘resiliency.’ Following the historic price run in late 2020-2021, there was an initial price shock and decline. Residential real estate in Ontario has been trading sideways for approximately 3+ years now. Furthermore, the Canadian economy has proven stronger than anticipated, so far avoiding a recession despite dismal trade relations with the United States while bolstering economic ties with Europe, China, and other trade-oriented economies.
https://www150.statcan.gc.ca/n1/daily-quotidien/260108/dq260108a-eng.htm
* Brokerage Tip: If you are securely employed and have access to capital, increased inventory, and economic uncertainty are leading towards real estate purchasing opportunities not seen in decades.
Residential Real Estate Market Report: Waterloo Region, Ontario
In 2025, the Waterloo Region residential real estate market slowed amid economic uncertainties, including trade tensions and moderate growth. Total sales reached 6,177 homes via the MLS® System, down 8.8% from 2024 and 25.3% below the 10-year average. This included 3,779 detached homes (down 7.7%), 1,174 townhouses (down 14.4%), 727 condos (down 11.6%), and 484 semis (up 1.5%). New listings climbed 5.2% to 13,872, boosting inventory by 13.8% and creating buyer-favourable conditions. Average prices fell 3.7% to $754,199, with detached at $876,896 (down 3.7%) and condos at $437,084 (down 7.4%). December sales dropped 9.5% to 306 units. CREA attributes this to subdued demand in Ontario, offset by interest rate cuts from 5% to 2.75% by mid-2025. CMHC notes weaker condo demand due to investor pullback.
For Q1 2026, economists forecast a modest recovery. CREA anticipates Ontario sales up 7.7-8% annually, with Q1 growth of 4-7% as pent-up demand emerges amid stable Bank of Canada rates at 2.25%. TD Economics projects 5.4% national price growth, but flat to -0.9% in Ontario early in the year, with Waterloo potentially seeing 1-3% price rises if inventory balances. RBC expects slight declines amid high supply, while CMHC predicts improved resale activity but slowed starts due to developer caution. Overall, Q1 sales averages may hover around $740,000-$760,000, with activity up modestly from Q4 2025's lows.
* Brokerage Tip: For Sellers, when facing increased inventory, price is important, but presentation is also critical. Crisp, visually appealing marketing attracts buyers to showings.
Analysis For First-time Home Buyers
First-time buyers gain from the buyer's market, with elevated inventory offering choices in the $500,000-$600,000 range for condos and townhomes. Stable rates and federal incentives like HST exemptions on new builds up to $1 million boost affordability. CMHC warns of job strains, but entering now secures lower prices before recovery. Affordability improved modestly, with RBC noting ownership costs at ~55% of median income nationally, better in Waterloo than GTA.
Analysis for Sellers Moving Up the Property Ladder
Sellers upgrading benefit from softened prices for larger homes, with detached averages down 3.7% enabling equity leverage. Balanced conditions allow negotiations, but rising inventory may prolong sales of entry-level properties. TD suggests Q1 stabilization aligns with rebounds, aiding family-sized demand. However, water shortages could delay new supply, thereby pressuring upgrades in the long term.
Water Shortage Impact on Future Developments and Supply
A confirmed water capacity constraint in the Mannheim Service Area—serving Kitchener, Waterloo, and parts of Cambridge, Woolwich, and Wilmot—has halted approvals for new developments since December 2025. Factors include infrastructure shutdowns, demand shifts, and population growth from non-permanent residents. This freeze threatens the region's 70,000-home target by 2031, potentially stalling thousands of units and jobs. Developers warn of reputational damage and a worsened affordability crisis. Long-term, reduced starts could lead to supply shortages by 2027-2029, per CMHC, countering current inventory highs and driving future price pressures despite short-term softness. Solutions like infrastructure upgrades are underway, but uncertainty persists.
What About Condos?
CMHC (Canada Mortgage and Housing Corporation) released a report in late September 2025 acknowledging a significant downturn in the condominium market, particularly in the Greater Toronto Area. Analysts have noted potential parallels to the late 1980s and early 1990s, when a similar downturn occurred in the condominium market.
Although a number of developments have been placed into receivership, developers have been better insulated during this downturn. Financing regulations which required 70% of a development to be sold preconstruction and more stringent lending guidelines have prevented a sharper correction. For those considering condominiums a longer term home, there may be some historic opportunities in the downturn.
[3] https://wrar.ca/waterloo-region-housing-market-ends-2025-with-rising-inventory-and-declining-sales
[4] https://www.crea.ca/housing-market-stats/canadian-housing-market-stats
[6] https://www.truenorthmortgage.ca/blog/housing-market-forecast
[7] https://economics.td.com/ca-provincial-housing-outlook
[8] https://kwprogroup.ca/real-estate/waterloo-region-real-estate-market-update-january-2026
[9] https://www.reic.ca/article-jan6-26.html
[10] https://economics.td.com/ca-provincial-housing-outlook
[11] https://www.theglobeandmail.com/business/economy/article-2026-in-charts-about-housing
[17] https://www.regionofwaterloo.ca/Modules/News/index.aspx?newsId=fdc88f9c-0f46-4d36-8dc7-ee22b1cdbfd0
