Toronto, Canada Housing Sales Rise But Prices Stay Flat as Development Costs Soar

Written by:

Steve Marcinuk

Date:

22 May 2026

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The Greater Toronto Area’s real estate market is showing early signs of stabilization in 2026, but the recovery narrative circulating in industry circles may be getting ahead of what’s actually happening on the ground. Sales volumes are up modestly, yet prices remain flat or have dipped further in some segments – a distinction that matters for developers, investors, and property managers trying to plan their next move.

Muhammed Khan has a front-row seat to these dynamics. As co-founder of PropCare Inc., a director at Ark Investment Holdings, and a principal at Asean Homes, he operates simultaneously across property technology, multi-family development, and custom home construction. That breadth gives him an unusually grounded perspective on where the market actually stands.

Sales vs. Prices

Transaction activity rose slightly in the first quarter of 2026 compared to the same period in 2025, but prices have stayed flat and in some cases declined. That divergence is most visible in condominiums and single-family homes, where the pandemic-era boom left behind an inventory overhang the market is still absorbing. Khan attributes this to speculation-driven overbuilding in 2021 and 2022. “Until we work through that inventory and bring it down to match consistent demand, prices will be a little sluggish,” he says.

Where there is some price movement is in the multi-family sector. Canada’s sustained immigration levels and shifting investor behavior are gradually redirecting capital away from speculative condo purchases toward income-producing rental properties. “People who were investing in single-family homes are slowly directing their assets toward multi-family,” Khan observes. That shift is producing a slight lift in multi-family valuations, though it remains modest.

Development Economics Stall

The more pressing concern is on the supply side. Ark Investment Holdings currently has around 65 active units and over 300 in various stages of development – but getting those projects off the ground has become significantly harder. Construction financing has tightened, development charges have climbed steadily, and site servicing costs have risen. In some municipalities, basic infrastructure capacity is becoming a constraint too. Khan describes a project in Waterloo where the city flagged insufficient water capacity to support the development. “The government wants more units, more affordable units, but the cities don’t have the infrastructure to support it,” he says.

Before breaking ground, developers face $50,000 to $75,000 per unit in development costs alone. When layered on top of elevated construction costs and softening rents, the return profile disappears. “If those costs don’t get adjusted, I think development will stay slow for the next two to three years,” he says.

That slowdown is visible in the custom home segment too. Asean Homes has seen its annual project volume fall from ten to twelve homes per year down to two or three. The company currently has four active projects and a few more scheduled to begin this summer. “The confidence in the market is very low,” Khan says. “A lot of people are having a hard time getting construction financing approved.”

AI Fills the Gap

As the rental market absorbs more demand from would-be buyers sitting on the sidelines, the operational burden on property managers and landlords has grown quietly but steadily. It’s in this environment that AI-powered coordination tools are beginning to find practical traction.

Small to mid-size firms overseeing anywhere from 200 to 1,000 units, along with self-managing landlords, are increasingly handling higher tenant volumes with the same headcount. The appeal of AI in this context isn’t novelty — it’s capacity. Tools that can receive a maintenance request, collect supporting documentation, identify an available trade, and coordinate scheduling without human intervention address a real operational gap that traditional staffing models struggle to fill affordably.

The workflow is straightforward: a tenant reports a leaking toilet, an AI agent takes the request, gathers photos and video, contacts a plumber, and books a mutually available time — all without a property manager touching the file. The use case is also extending to builders for post-handover warranty coordination, a sign that the underlying coordination problem cuts across multiple stages of the housing lifecycle, not just ongoing tenancy.

Incompetence Over Fraud

Ontario’s construction sector has attracted considerable media attention around contractor fraud. Khan, who has worked as a builder and general contractor in the province for 14 years, offers a more measured read. The larger issue, he says, is unqualified people entering the trades as the job market tightens. “I would use the word incompetence more than scam,” he says. Homeowners who skip proper vetting – checking licensing, reviewing past work, verifying references – are exposed to poor outcomes that may look like fraud but often stem from a lack of qualification.

For his own projects, the vetting process is firm: licensing comes first, track record comes second. Any contractor whose past work shows scheduling failures, budget overruns, or quality issues is disqualified regardless of credentials. For homeowners navigating these decisions without industry background, Khan’s advice is simple — research before hiring. Understanding market rates helps flag quotes that seem too low to be legitimate.

Watching the Horizon

Multiple compounding pressures extend well beyond the real estate sector. Inflation, elevated interest rates, geopolitical uncertainty, and ongoing trade tensions are all weighing on consumer sentiment in ways that directly affect housing demand. “Buying real estate is the least priority for a normal person right now,” Khan says. “The sentiment is not to buy assets. The sentiment is to survive.”

That doesn’t mean the longer-term fundamentals have changed. Canada’s population growth, driven in large part by immigration, continues to underpin housing demand. The question is timing – how long it takes for the current inventory overhang to clear and for supply and demand to rebalance. Those with the financial flexibility to hold through the current cycle may find themselves well-positioned when conditions improve. Those who cannot are, in many cases, already on the sidelines. “The fundamentals of the economy are still strong,” Khan says. “It’s just a matter of when.”

About the Expert: Muhammed Khan is the co-founder of PropCare Inc., a director at Ark Investment Holdings, and a principal at Asean Homes, operating across property technology, multi-family development, and custom home construction in the Greater Toronto Area.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.