Reading note: This article was written on September 14, 2026. Interest rates, housing starts, sales and listing data reflect information available on that date. No single indicator can reliably predict a real-estate cycle, and leading signals can reverse. This is general information and public education—not advice to buy or sell, a mortgage approval, an investment-return promise or a home-price forecast.
When people ask whether a housing market has bottomed, they usually watch prices. The problem is that prices are slow to react. Sales, listings, financing costs and the future supply pipeline may already have changed before the price statistics acknowledge the shift. By the time headlines unanimously declare a recovery, the most informative turning-point signals may be behind us.
That is why I do not assess the Toronto housing cycle by asking only whether prices will fall again. I ask three questions. How many homes will actually be available for buyers two or three years from now? Are financing costs low enough to bring buyers back? Can rents carry enough of landlords' ownership costs to reduce the pressure to list?
Core view: A housing-market turning point should not be judged from prices alone. Three more useful leading signals are a material decline in future ownership-oriented housing supply, financing costs low enough to reactivate demand, and rents covering a larger share of landlords' carrying costs so that forced sales and new listings keep falling. A turning point becomes more credible when all three move together.
What history actually teaches us
Toronto prices fell from their late-1980s peak, but fewer housing starts did not produce an immediate resale rebound. Projects already started, under construction or newly completed still needed time to be absorbed, while the economy and employment had to recover. TRREB's historical statistics show the annual average price falling from $273,698 in 1989 to $198,317 in 1996, then rising to $211,729 in 1997. TRREB cautions that its market area changed over time, so long-range comparisons require care.
The lesson is not to force today's market into a 1990s template. It is to understand the sequence. Developers first reduce land purchases and construction starts. Future homes available for sale then decline. Lower rates gradually restore purchasing power. When sellers stop listing in large numbers, resale supply and demand begin to turn. Prices confirm the change last.
A decline in starts is therefore a leading signal, not an instant switch. It reduces the flow of future supply. The timing of any shortage still depends on projects already underway, completed inventory, financing conditions and resale pressure.
Signal one: ownership-oriented housing starts
Headline housing-start totals can be misleading when the question is the resale market. We also need to ask whether the new units can eventually be purchased by households. Purpose-built rentals, condominium apartments and ground-oriented ownership homes do not have the same effect.
The CMHC Fall 2026 Housing Supply Report shows a sharp structural change. Using the four-quarter moving total through the second quarter for the Toronto CMA, condominium starts fell from 31,445 in Q2 2023 to 8,289 in Q2 2026. Ground-oriented ownership starts fell from 10,391 to 6,386, while purpose-built rental starts rose from 9,521 to 12,062. In the City of Toronto, only 156 condominium units started during the first half of 2026, compared with an annual average of about 7,000 during the prior decade.
The decline in total starts is only half the story. The more important issue is the gap in new ownership supply. Purpose-built rental construction can add rental choices and ease some rent pressure, but those units do not become homes for sale when completed. They cannot directly replace missing new ownership inventory.
For a turning-point analysis, I therefore track starts, presales, cancellations and completions for condominiums and freehold homes. Fewer starts today do not create an immediate shortage tomorrow. If low starts persist and the construction pipeline and completed inventory are absorbed, however, more buyers may have to rely on the resale market.
Signal two: can interest rates reactivate demand?
Less supply is the fuel; financing conditions are the ignition. Without better affordability, limited supply can still sit on the market because buyers cannot carry the payment or pass qualification.
The Bank of Canada began cutting rates in June 2024 and reduced its overnight target to 2.25% on October 29, 2025. In its September 2, 2026 decision, the Bank maintained 2.25%. Financing conditions were easier than at the 2023 peak, but the policy rate alone does not determine a buyer's outcome. The actual mortgage rate, monthly payment and qualified loan amount also depend on bond yields, lender pricing and the borrower's circumstances.
Rates influence both sides of the market. For buyers, they affect purchasing power and willingness to enter. For landlords, they affect renewal payments and carrying pressure. If rates remain too high, demand may stay weak and some owners may be unable to carry their properties. When financing stabilizes at manageable levels, buyers can return while fewer landlords feel compelled to sell.
One rate cut is not proof that a bull market has returned. I look for mortgage rates that remain lower for several months, improving transaction volumes, and evidence that financing relief is reaching household cash flow and qualification. Rates matter, but actual sales must confirm their effect.
Signal three: landlord cash flow and new listings
The most immediate source of resale supply is not what developers may complete five years from now. It is whether today's owners want or need to sell. For an investor-landlord, that decision often sits inside the monthly cash-flow statement.
Rent should not be compared only with mortgage interest. Monthly cash outflow can include the full mortgage payment, condominium fees, property tax, insurance, repairs, vacancy and other costs. Principal repayment builds equity and is not purely an economic loss, but it still leaves the bank account each month. A $1,000 cash shortfall remains $1,000 of pressure.
When rent falls far below total cash outflow while a high-rate renewal, rising fees and repairs arrive together, some landlords sell. More new listings give buyers more choice and keep prices under pressure. When rates fall and rent covers a larger share of carrying costs, the monthly gap becomes easier to tolerate. Forced selling and loss-cutting can decline, and new listings show the change before prices do.
The 2026 data contain early signs worth watching. TRREB reported that GTA new listings fell 17.8% year over year in July and 14.1% in August. In the second-quarter condominium market, sales rose 8.8% year over year to 4,783, new listings fell 19.0%, and quarter-end active listings fell 15.4% to 8,061. The average selling price was still down 7.5%. Prices had not formally turned, but resale pressure had eased and the balance was tightening.
One month or one quarter cannot establish a trend. Seasonality, base effects and changes in statistical coverage can influence year-over-year comparisons. I want to see whether new listings keep falling, the sales-to-new-listings ratio rises, and months of inventory plus days on market decline together. Several months of confirmation would make the signal more credible.
Rental conditions are also segmented
The CMHC 2026 Mid-Year Rental Market Update reported a 3.0% Toronto apartment vacancy rate for 2025, within its preliminary estimated balanced range of 2.5% to 4.0%. In early 2026, asking-rent affordability improved for new Toronto tenants and competition among recently completed higher-priced units increased. On the surface, that can weaken landlord cash flow.
The rental market is not one average. A new purpose-built rental, an investor-owned condominium, an older tenancy, and different locations or unit sizes can follow different rent paths. The decision to sell depends on what a specific property can earn relative to that owner's mortgage balance, renewal rate and carrying costs—not only the city-wide average.
Rent does not need to cover the entire mortgage payment for every owner to keep holding. What matters is whether the cash deficit becomes small and stable enough for that household to carry. A shrinking gap can reduce listing pressure; a widening gap can bring it back.
All three signals need confirmation
| Leading signal | What to monitor | Current indication | Stronger confirmation |
|---|---|---|---|
| Ownership supply | Condo and freehold starts, presales, cancellations and completed inventory | Starts are far below their previous peak | Low starts persist and flow through to fewer completions and less saleable inventory |
| Financing costs | Actual mortgage rates, payments, qualification and sales | The policy rate is 2.25% and has been maintained | Lower financing costs consistently translate into stronger transactions |
| Landlord selling pressure | Rent versus total cash outflow, new and active listings, months of inventory | New listings fell materially in July and August | Listings keep contracting while the sales-to-new-listings ratio and selling speed improve |
By September 2026, Toronto had some conditions associated with a turning point: ownership-oriented starts were much lower, the policy rate was well below its peak, and resale listings were declining. That does not prove prices have entered a sustained upswing. A more accurate description is that the market is moving from heavily buyer-favoured conditions toward better balance.
I treat a turning point as a process, not a headline date. Owners first become less willing to sell and listings decline. Buyers then re-enter as financing improves and sales strengthen. After inventory is absorbed, prices may stabilize and recover. The market does not announce the bottom; it leaves clues in supply, rates and cash flow.
CMHC's data show the four-quarter moving total of saleable Toronto CMA condominium and freehold starts falling from a combined 41,836 in Q2 2023 to 14,675 in Q2 2026, a decline of about 65%. The sequence resembles the 1990s cycle in one respect—ownership starts weaken before prices confirm a turn—but the economy, population, credit system and housing mix are different. History rhymes; it does not provide a guarantee.
When some mortgage offers are around 4%, rent may cover more of the interest, property tax, fees and other carrying costs, while a larger share of the remaining negative cash flow may be principal repayment. I discussed that mechanism in Why a 4% Mortgage Rate Can Divide a Hot and Cold Housing Market. It can help explain fewer listings, but it does not mean every property should be held.
Fixed mortgage rates also respond to government-bond yields and lender pricing, so they may not move with the Bank of Canada. The Federal Reserve's September 15–16 meeting had not produced a decision when this article was published. A hike or a cut was therefore a scenario, not a fact. Higher market rates could make some buyers act sooner, but they could also reduce purchasing power; sales and listing data must settle the question.
Conclusion: a leading signal is not a trading instruction
Weak new ownership starts, a more stable policy rate and fewer new listings suggest that three leading indicators have improved. A green light does not mean traffic instantly starts flowing, and it does not guarantee rising prices. Confidence, employment and mortgage qualification can take time to recover after a long adjustment.
For investors, these signals support resisting a forced sale driven only by short-term pessimism. They do not mean every owner should mechanically hold until 2028. The decision still depends on property cash flow, renewal risk, repairs and management costs, household goals, tax consequences and risk capacity. The objective is not to guess one year perfectly, but to preserve the ability to wait while keeping clear exit rules.
Sources: CMHC Fall 2026 Housing Supply Report; CMHC 2026 Mid-Year Rental Market Update; Bank of Canada rate announcement, September 2, 2026; TRREB July 2026 market statistics; TRREB August 2026 Market Watch; TRREB Q2 2026 Condominium Market Report; TRREB Historic Statistics; Federal Reserve September 2026 calendar.
Henry Wang, Toronto, September 14, 2026