Could 2026 be the Year of the Renter?
After 15 straight months of falling rental prices, the balance of power could finally be getting back into the hands of renters, which should come as a relief to financially strapped Canadians, although not everyone will be able to benefit.
At the end of 2025, the average asking rent for all properties in the country was $2,060 per month, according to Rentals.ca, still high by historical standards but down from the peak of $2,202 in May 2024.
With demand slowing and the supply of units coming to market still growing, all signs point to apartment rents continuing to fall throughout the remainder of 2026.
“I think it’s going to be an interesting year because by the end of 2025 we had negative population growth, which was quite surprising,” said Giacomo Ladas, deputy director of Rentals.ca, which tracks rental prices across the country.
In terms of supply, there are still 180,000 units under construction across the country, a small fraction of the existing three million-plus homes but large enough to have an impact on the market.
“Vacancy rates are rising and supply will outweigh demand for the remainder of 2026,” Ladas said. “I don’t think the incentives will go away. Tenants are taking a lot more time to make their choices because of the slowing demand.”
Carl Gomez, chief economist at Centurian Asset Management, which owns a 23,000-unit private REIT, said the market needs this supply after decades of undersupply, but cautioned that not all of it is hitting the mark.
“There is a large surplus that has increased the vacancy rate. But you have to look beneath the surface of what is being added, and a good portion of the supply is not filling the demand gap in the market,” he said, pointing to small one-bedroom apartments. “They’re coming on the market and they’re not necessarily affordable for the average renter.”
Although rents have fallen 5.4 percent over the last year, they are still 14.1 percent above levels at the end of 2019, according to Rentals.ca.
It is an established principle that no more than 30 percent of your gross income should go toward rent. That would equate to an average income of $82,400 for a typical apartment in Canada alone, with the figure much higher in Toronto and Vancouver. So, yes, we’re still talking about affordability.
It’s no real shock when groups like the Association of Community Organizations for Reform Now (ACORN) oppose even a modest 2.1 per cent benchmark rent increase in Ontario. In some parts of the rental world, people simply can’t afford it.
However, the picture is likely to be worse for landlords as their profits today do not appear particularly tangible and the value of their holdings is weakening in a weaker market.
According to real estate firm Avison Young, returns in the multifamily sector are not particularly spectacular, with the return on investment, or return on investment, in some Canadian cities ranging from 4 to perhaps 5.25 percent.
Investment demand from private buyers has increased as they see rents rising in the long term, if not until 2026. In the middle are publicly traded REITs, which trade at market value today, with unit prices low and falling.
Over the past six months, we’ve seen two Ottawa-based REITs, InterRent and Minto Apartment, which have nearly 25,000 units combined, seek privatization because they were so poorly valued in the public markets.
Mario Saric, an analyst at Scotia Capital, kicked off a report on the investment bank’s 21st housing panel by saying there may not be a 22nd next year.
“(The) long-term fundamental picture is good,” Saric said in his report. “New supply growth is expected to slow sharply in 2027 and beyond, particularly as it relates to the delivery of new condominiums. Despite a reduction in the premium cost of owning compared to renting, we still believe renting remains financially more attractive, particularly given the limited prospects for material home price increases.”
Even though home prices aren’t falling that much since their peak in 2022, when the Canadian Real Estate Association’s home price index was over $800,000, they are still falling and are well below $700,000 today. There is no fear of missing out on the housing market.
Sam Kolias, chief executive of Boardwalk, Western Canada’s largest REIT based in Calgary, said there is plenty of choice for renters, which he called good news.
“A stable, affordable housing market is great for a growing economy,” said the real estate executive, who believes it is time for the government to ease immigration policies. “There is more than enough housing to bring back good, interested international students. That will help our university budgets and it will help our economy.”
As for REIT valuations, he wonders how long public entities can continue to operate if private investors buy them up and value them higher.
Kolias and others believe those days could be short-lived, even if market conditions encourage more supply. Rising costs and falling demand are discouraging new construction, and there are few guarantees that future market conditions will continue to benefit tenants.
New condo sales in the Greater Toronto Area fell to their lowest level since 1991 in the final quarter of 2025, and research firm Urbanation found a record 28 projects were canceled last year, developments that would have added 7,243 units in Canada’s largest city.
A large percentage of condos are owned by investors and end up on the rental market, so supply will decline. And while some condo projects have been converted to rental housing, there will likely be fewer such conversions in the market.
“There will be virtually no new condo deliveries until 2029,” Urbanation said.
Rentals.ca’s Ladas said that as asking rents continue to fall, more renters across the housing continuum will see the opportunity to get a cheaper apartment and potentially move.
That’s a great story for renters in 2026 — but don’t expect it to last long beyond that.
• Email: gmarr@postmedia.com