- Listings will remain on the market for longer periods - There is a direct correlation between a cooler housing market and the time listings stay on the market. The stats for the Kitchener-Waterloo sales in December show that listings are now on the market for an average of 45 days. This stat includes both condos and freehold properties. Detached homes averaged 22 days for 2025, and condos averaged 55 days. If the market stays cool, expect these numbers to rise in 2026 to 35+ and 70+, respectively.
- An 8.5% -12% decrease in sales pricing - Expect the downward trend in sales pricing to continue in 2026. 2025 saw a year-over-year decrease in detached homes of 3.7%, with the average price at $876,896. Condos experienced a 7.4% drop, with the average sale price at $437,084. My expectation is that Kitchener-Waterloo will experience stronger downward trends in 2026. This is not isolated to our region and will likely be felt across most major marketplaces across Canada. All of this is tied to concerns related to economic uncertainty.
- Kitchener housing market will outpace Waterloo - Affordability and cost of living will be at the forefront of buyers' minds in 2026. The city of Waterloo is plagued by a Mayor and council who show little regard for taxpayers. Council approved the highest property tax increase of all Waterloo Region municipalities at 6.4%. Property taxes in the city of Waterloo will rise a staggering 17.99% over the past three years, with this latest increase! Smart buyers will consider that the city of Kitchener will experience a 2.2% increase in 2026, and that fiscal responsibility is of greater importance to the Mayor and council in that city. Ultimately, the cost of living in Kitchener is better than in Waterloo. This does not factor in other factors buyers consider when purchasing (commuting, schools, parks, etc.), but with so many similarities between the two cities, traditional local stereotypes are fading, and have less weight than in the past when it comes to where you reside in Kitchener-Waterloo.
- Noticeable rise in foreclosures/power of sale listings - It's an ugly thing to talk about, but the reality is Canadians are experiencing unprecedented debt loads. According to credit-tracking agency TransUnion Canada, total consumer debt spiked 4.1% to $2.6 trillion in the third quarter of 2025, including a 4.1% jump in mortgage balances, year-over-year, to $1.89 trillion. Canadian household debt is the second-highest among advanced economies.* Rewind to 2021 when the Kitchener-Waterloo housing market was at an all-time high, and buyers were able to lock in mortgage rates close to 1%. Most of those buyers took a five-year fixed-rate mortgage. These buyers will be revisiting their lenders, who now offer renewals closer to 4-4.5%. Average monthly mortgage payments will rise by $500-$600. Cutting out your morning Starbucks makes a dent, but it doesn't add up to $500. I am already seeing more bank sales these past few months than I have over the past 14 years of selling real estate. Unfortunately, affordability will push some households in Kitchener-Waterloo to the breaking point, resulting in a rise in foreclosures and power-of-sale listings. I should note, this will not be a widespread crisis, but noticeable enough to mention the challenge.
- A pause or potentially lower interest rates - The big six banks are split on whether the Bank of Canada will raise, pause or reduce interest rates in 2026. This new year brings real economic challenges for Canada, including the renegotiation of the Canada-United States-Mexico Agreement (CUSMA) and lingering inflation issues. Many major national projects announced by the federal government are on the books. It will be up to the federal and provincial governments to get the money flowing and shovels in the ground. These projects would boost job numbers; however, the reality is that governments do a lot of announcing, and it's the follow-through that often falls by the wayside. If the Canadian economy continues to lag behind other major economies, we should see interest rate reductions. If we see positive numbers, interest rates would likely pause or potentially rise. The major concern is how Canada fares with the renegotiation of CUSMA. Unpredictable relations with our southern neighbours do not offer any clear indication of how this process will pan out. It is expected that major concessions are likely from both Canada and Mexico. What they are is the big unknown. At this time, I expect 2026 to bring a further half-point reduction in interest rates, starting as early as spring.
- SAY SOMETHING POSITIVE! - Many factors are at play for how the 2026 housing market will pan out in Kitchener-Waterloo. There are positives in the local housing market that are worth noting. Most notably, both the federal and provincial governments have proposed new rebates that would effectively eliminate the full 13% HST for qualifying first-time home buyers on newly built homes valued at up to $1 million. I expect this to be a good year for first-time homebuyers who have waited patiently to enter the market. It's also worth noting that move-up buyers could see their purchasing power stretch, as the value of million-dollar-plus homes in the region is expected to decline the most. Even if your home valued between $650,000 - $850,000 falls in value (in line with general market sentiment), if it's correctly priced, you should see a smaller buyer pool for move-up opportunities.
*https://www.thestar.com/business/canadian-debt-load-spikes-to-2-6-trillion-as-falling-interest-rates-lower-the-cost/article_0089b755-158b-4b36-b250-b36b0395c5cf.html