Anyone who works in the real estate industry, especially pre-construction houses and condominiums, understands this is a cyclical business. Savvy real estate professionals have faith the market will eventually come back, and pass on that optimism to their clients and potential clients.

We can all learn a lot from the industry’s history – especially when it comes to our flexibility and resiliency.

Over the years as customer needs and desires changed, our builders and developers came up with new approaches such as open-concept layouts, linear kitchens to save space in condominiums, green features and finishes and the like. Now we are seeing innovation and change again with the federal government promoting and builders embracing modular housing, which promises a more cost-effective form of building.

Our industry will come back, although it may look a bit different to accommodate current needs and trends.

Considering the pent-up demand for housing in Canada and the lack of housing starts that could produce future inventory, we can look forward to positivity in 2026. REMAX Canada is predicting home sales to increase in the new year, and typically, new-construction real estate follows resale trends.

CMHC is warning that housing starts in Toronto will likely be at the lowest level in 30 years. Even if starts pick up, it will be years before they turn into inventory, thus heightening prices and demand. Think back to the 1990s, when a lack of inventory spurred historically high prices over time. 

Owning real estate has been a solid investment

From the consumer’s point of view, over the past few decades owning real estate has been a good long-term investment. Riding out economic cycles and grabbing opportunity when it presents itself combine to create the optimum return on investment for homeowners.

Just look at the wealth owners who held on to their houses and condominiums earned over time. Ownership is also a tremendous way to pass along wealth to younger family members, and brings with it the possibility of earning passive income through renting. 

And talk about cyclical!

Remember in the early 1980s, Canadians faced interest rates that skyrocketed to over 20 per cent. Inflation hit over 12 per cent and economic growth slowed.

Many people bought real estate in the 1970s and 1980s because of a psychological phenomenon called "inflationary psychology." They bought, even unrealistically, because they believed prices were poised to increase.

Those who had purchased at much lower interest rates were hit with far higher rates to renew. Some were forced into foreclosure, and the housing market stalled. In 1981, the average five-year fixed mortgage rate reached a high of approximately 21 per cent.

Those who could (mainly Baby Boomers) bought real estate, and those who persevered over economic cycles are now handing their investments down to their fortunate children. 

A new down cycle in 2008

Things went haywire again in 2008, when the U.S. market crashed and prices fell here too. Our conservative banking practices, along with compulsory mortgage insurance for numerous borrowers and other economic practices, saved us from the fate south of the border.

In response to the situation, the Bank of Canada lowered interest rates. Home prices rose again, and those who found ways to hold on to their real estate did well in the long run. 

Home prices in Canada reached their highest point in 2017. To cool the market, the government introduced the Fair Housing Plan and the foreign buyer tax. As a result, sales dropped and prices fell temporarily.

Then COVID descended upon us, and home prices rose because of unprecedented demand.

People sought larger living spaces during lockdown, especially those able to work from home. In fact, working from home became a new normal for a substantial segment of the population. Urbanites moved to smaller towns, and Canadians enjoyed historically low interest rates. 

Which leads us to... today

Today, we take heart in the fact that real estate cycles come and go, but the market always comes back – and when stability is restored, prices will rise again.

If you look at prices over the long run, since 1994 Greater Toronto Area housing values have risen 436.2 per cent. In other words, every generation of Canadians has faced homeownership challenges; yet over the past few decades, Canadians have earned substantial long-term wealth by owning houses and/or condos.

Those who persevered years ago are enjoying the financial fruits of their patience today.

Despite the doom and gloom in today’s media, NOW is the best buyer’s market in decades. However, like everything else, this buyer’s market will pass.

We are poised for a market comeback in 2026, so it is important for professionals in all aspects of the industry to take advantage of conditions that predict a brighter future.

Above all else, we are resilient.

And remember that pre-construction housing is an industry that can turn on a dime when the environment is right. With all levels of government working with the private sector to address housing affordability, that environment looks promising.

I wish everyone in the industry a prosperous New Year!