Understanding Canada’s Housing Market: Insight from the In-House Podcast
As 2026 begins, reflections on the previous year provide valuable insights into Canada’s complex housing market. In the latest episode of "In-House," hosted by Joëlle Hamilton and featuring Mathieu Laberge, Chief Economist at Canada Mortgage and Housing Corporation (CMHC), listeners are treated to a comprehensive analysis of the current trends, challenges, and projections for the housing sector.
The Ongoing Supply Challenge
One of the most pressing questions facing Canada’s housing market is why creating new supply remains such a daunting task. According to Laberge, the obstacles can be categorized into two main types: contextual and structural. Contextually, the volatility in the economy—exacerbated by geopolitical events and trade tariffs—has forced individuals and businesses to delay decision-making, directly impacting housing starts. Structurally, the industry grapples with low productivity and high regulatory burdens, leading to slowdowns in housing supply.
Regulatory Burden: A Double-Edged Sword
Simplifying regulatory processes could enhance housing development. Laberge emphasizes that municipalities with lower regulatory burdens tend to experience faster building rates. For instance, places like Alberta, particularly Edmonton, demonstrate a more robust pace of development compared to larger urban centers such as Toronto and Vancouver, where red tape can stifle progress.
Reflecting on 2025: Housing Starts and Trends
The housing landscape in 2025 saw an early burst of growth that ultimately waned. Laberge noted that Canada started the year with impressive housing starts, but as economic uncertainty set in, momentum decreased, leading into 2026 with a stark lower supply of new homes. This shift has caused changes in the types of homes being constructed, moving away from large condo projects towards smaller, quicker projects like row houses and semi-detached units. This adaptation aligns with the current economic climate, where builders favor "missing middle" housing options that can be completed more rapidly.
The Emergence of New Rental Dynamics
The podcast also delves into the evolving rental market, highlighting the contrasting narratives within different segments. As the housing market stabilized, it witnessed an influx of new rental units and a moderate uptick in vacancy rates and slowed rental growth in higher-end properties. While the luxury rental sector faced increased competition, lower-income households continued to struggle with affordability, creating a precarious divide within the rental market.
Interest Rates and Borrowing Trends
Interest rates played a significant role in shaping borrower behavior in 2025. With the Bank of Canada holding rates steady for a substantial period before cutting them, borrowers experienced nuanced changes in affordability. Laberge explains that while low rates typically boost affordability, the effects were moderated due to the historical spread between mortgage rates and policy rates. Notably, many homeowners are now opting for shorter-term fixed rates as they brace for potential market shifts.
What Lies Ahead: Predictions for 2026
Looking into 2026, Laberge asserts that the macroeconomic environment will remain challenging, especially with CUSMA reviews and U.S. midterms on the horizon. The slow momentum currently seen in the housing markets raises pertinent questions about future demand and sustainability. Given the balancing rental market and ongoing inventory absorption in condo markets, the industry must find a way to adapt swiftly to shifting demands to avoid future crises.
A Call for Innovation
The discussion also pointed to the necessity for innovation within the housing sector. Laberge argues that to increase productivity and investment in construction technologies, the industry needs scalability, which is currently lacking due to the predominance of small firms. Encouraging larger players in the residential construction space could foster advancements in building practices that
could ultimately benefit the housing market.
Conclusion
As the In-House podcast illustrates, Canada’s housing market is in a state of flux, shaped by a myriad of factors from regulatory hurdles and economic uncertainty to evolving borrower dynamics. The insights shared by Laberge present a clear picture of the challenges and opportunities that lie ahead. For stakeholders, understanding these trends will be crucial in navigating the complexities of housing supply, affordability, and overall market health in the years to come. As CMHC prepares to release critical data on housing starts and forecasts for the future, the conversation around Canada’s housing market will undoubtedly remain at the forefront of public discourse.
For those interested in following this evolving story, subscribing to industry insights and updates is essential. Stay informed as the landscape of Canadian housing continues to develop.
