Three Key Trends CoStar Says Are Likely to Shape Canada’s Real Estate Market in 2026

Key Terms

capital market financial

A capital market is the system and places where businesses, governments and other organizations raise long-term money by selling stocks and bonds, and where investors buy and sell those securities. Like a town marketplace where sellers raise funds and buyers choose what to back, capital markets determine how easily organizations get financing, the cost of that financing, and the potential returns and liquidity investors can expect—key drivers of company growth and share prices.

mortgage rates financial

Mortgage rates are the interest percentages lenders charge when people borrow money to buy a home or refinance an existing loan. They determine how much borrowers pay each month and over the life of the loan — like the added cost on top of a car’s sticker price — and influence housing demand, consumer spending, and bank profitability, so investors watch them as a bellwether for the broader economy and financial markets.

capital stack financial

The capital stack is the ordered list of sources of money a company or project uses, showing who gets paid first and who takes more risk — think of it like layers in a cake where the bottom slices are safest and the top slices are most exposed. Investors use it to judge potential return and risk: positions lower in the stack (like senior lenders) get steadier, smaller returns but higher protection, while higher positions (like common equity) can earn more if things go well but can lose value first.

private real estate investment trusts financial

A private real estate investment trust (private REIT) is a pooled investment vehicle that owns and manages income-producing properties but is not listed on public stock exchanges. Think of it as a neighborhood landlord where many investors pool money to own buildings together; it can provide steady rental income and property value growth, but it usually has limited trading ability, less transparency, longer holding periods, and higher minimums than public REITs — all important for assessing liquidity, risk, and potential returns.

ARLINGTON, Va.--(BUSINESS WIRE)-- CoStar, the leading global provider of online real estate marketplaces, information and analytics in the property markets, today released the three key trends that will likely shape Canada’s real estate market outlook in 2026.

An economy in structural transition

In 2025, Canada’s economy outperformed expectations, with strong domestic spending helping avoid a recession. The 2026 outlook, however, may be less optimistic.

“Population growth is poised to decline due to new federal government rules restricting immigration for non-permanent residents,” said Carl Gomez, Chief Economist for Canada at CoStar Group. “With households still reeling from significant affordability concerns and an elevated cost of living, Canada’s domestic economy is likely to struggle replicating its 2025 standout performance, resulting in a demand-side drag for some household-driven property types.”

A cyclical housing supply overhang

Canada has seen a growing inventory of for-sale condos, with the excess inventory expected to clear in the next six to nine years.

“Developers have shifted their focus to purpose-built rental apartments in recent years, resulting in the highest number of rental apartment units currently under construction in the last 50 years,” said Gomez. “Given high development costs, the average unit rent is considerably high, leaving many of the recently completed units vacant due to affordability constraints.”

Average home prices and apartment rents are expected to continue declining in the upcoming year, with an equilibrium unlikely to return until 2027.

Capital market reset

As inflation remains elevated and government debt continues to rise, long-term interest and mortgage rates have not dropped in response to central bank policy cuts over the past two years.

“Capital market conditions are unlikely to be a continued tailwind for the sector,” said Gomez. “Distress-driven transactions, especially those involving land and development assets, are likely to continue to increase and prevent a meaningful improvement to overall deal activity in 2026.”

Real estate capital stack is likely to continue evolving in 2026 as new sources, including private real estate investment trusts, family offices, infrastructure funds, and private debt, help to narrow the existing gap between buyer and seller expectations over the longer term.

The full analysis can be found here.

For more information about the company and its products and services, please visit costargroup.com.

About CoStar Group

CoStar Group (NASDAQ: CSGP) is a global leader in commercial real estate information, analytics, online marketplaces, and 3D digital twin technology. Founded in 1986, CoStar Group is dedicated to digitizing the world’s real estate, empowering all people to discover properties, insights, and connections that improve their businesses and lives.

CoStar Group’s major brands include CoStar, a leading global provider of commercial real estate data, analytics, and news; LoopNet, the most trafficked commercial real estate marketplace; Apartments.com, the leading platform for apartment rentals; Homes.com, the fastest-growing residential real estate marketplace; and Domain, one of Australia’s leading property marketplaces. CoStar Group’s industry-leading brands also include Matterport, a leading spatial data company whose platform turns buildings into data to make every space more valuable and accessible; STR, a global leader in hospitality data and benchmarking; Ten-X, an online platform for commercial real estate auctions and negotiated bids; and OnTheMarket, a leading residential property portal in the United Kingdom.

CoStar Group’s websites attracted over 143 million average monthly unique visitors in the third quarter of 2025, serving clients around the world. Headquartered in Arlington, Virginia, CoStar Group is committed to transforming the real estate industry through innovative technology and comprehensive market intelligence. From time to time, we plan to utilize our corporate website as a channel of distribution for material company information. For more information, visit CoStarGroup.com.

This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that domestic economic conditions in Canada, such as increased cost of living does not drive down consumer spending, does not occur or does not negatively impact the household property market as expected across supply and demand; the risk that Canadian capital market conditions and transaction activity is not impacted as expected by macroeconomic conditions. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2024 and Forms 10-Q for the quarterly periods ended March 31, 2025, June 30, 2025, and September 30, 2025, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20251230695435/en/

News Media Contacts

Haley Luther

Senior Communications Manager

(216) 278-0627

hluther@costar.com

Source: CoStar Group