Canada's Luxury Real Estate Holds Steady as Mid-Market Corrects

Written by:

Steve Marcinuk

Date:

28 Apr 2026

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The Canadian real estate market has been correcting since the peak of the pandemic-era boom, but not all segments are moving in the same direction. While affordability pressures and excess condo supply continue to weigh on mid-market and entry-level buyers, the country’s luxury residential sector is following a different path – one shaped more by wealth transfer, lifestyle decisions, and global capital flows than by interest rate cycles.

That distinction is central to how Mustafa Abbasi, President of Sotheby’s International Realty Canada, is reading the current market. Abbasi previously founded and scaled Zolo into Canada’s largest digital real estate brokerage before its acquisition by Questrade, and later launched an AI-native fintech venture.

Two Markets, Two Realities

The clearest signal from the current environment is that Canada’s real estate market has split in two. In the middle market, affordability concerns, rate sensitivity, and buyer hesitation continue to slow activity. But at the top end – properties priced at $3 million and above – the dynamics are noticeably different.

Many luxury transactions are cash-driven, and buyers at this level are motivated by lifestyle choices and long-term investment thinking rather than monthly carrying costs. “They’re pushing interest rates to the side,” Abbasi explains, “because there are a lot of cash buyers in the market, and some are looking at this as probably the best time to look at those properties from an investment perspective.”

Supply constraints are reinforcing that resilience. Sellers at the $3 million-plus level are largely holding, which means inventory remains tight even as broader conditions have softened. That scarcity is helping support pricing in a way that isn’t visible in lower tiers, where a surge of new supply – particularly condos in Toronto, Vancouver, and Montreal – has put downward pressure on values.

Where Condo Markets Stand

The gap between luxury stability and mid-market softness is most visible in the condo sector. A combination of factors converged at once across Canada’s major urban centers: a wave of new construction completions, the introduction of the foreign buyer ban, rising interest rates, and a pullback in investor demand. According to Abbasi, many of the original buyers in those new developments were foreign purchasers, amplifying the drop in demand once the ban took effect.

The result has been a meaningful reduction in demand at a time when supply was peaking. For buyers who can act now, the conditions are favorable. “There is a tremendous opportunity right now for those buyers entering the market, because you can get some phenomenal deals,” Abbasi notes. A rebalancing is expected, but it may take time, with a potential recovery more likely in late 2027 or 2028 as supply shrinks and pent-up demand builds again.

International Buyers Returning

Cross-border interest in Canadian luxury real estate is picking up again after a period of suppressed activity. The foreign buyer ban, introduced to cool demand and improve affordability, had its most pronounced effect in the months immediately following its announcement. That initial shock has since faded.

Website traffic data from Sotheby’s Canada is already reflecting renewed interest. Abbasi points to increased traffic from the Middle East and South Asian diaspora, driven by ongoing regional instability and Canada’s appeal as a stable, multicultural destination for families and capital. There is also growing speculation in the industry that the ban could be lifted by 2027 or 2028. If that happens, Abbasi expects the effect on luxury pricing to be significant. “If that ban is lifted, we’ll have a totally different story,” he says. “Prices will just go the other way.”

Expanding Beyond Toronto and Vancouver

The geography of Canadian luxury real estate is also widening. For years, high-end residential activity was concentrated in Toronto, Vancouver, and Montreal. That gap is narrowing as markets like Calgary, the Okanagan, Quebec City, and Halifax emerge as genuine luxury destinations, driven by lifestyle migration, remote-work flexibility, and relative affordability compared with the country’s two largest cities.

“Luxury isn’t set to just the major markets anymore,” Abbasi says. For a national brokerage, that geographic spread represents both a strategic priority and a growth opportunity.

Resetting Expectations

One of the more practical challenges in the current environment has less to do with supply or rates and more to do with seller psychology. Many owners are still anchored to 2022 pricing – a period marked by bidding wars, compressed timelines, and conditions that were anomalies rather than the baseline.

“Some may still expect to get bidding wars, and if you are expecting that, you’re going to be disappointed,” Abbasi says. The agent’s role in this environment is partly about closing that expectation gap – pricing properties accurately for current conditions while maximizing exposure through the right channels. For Sotheby’s, that means using a global network to reach buyers in markets like Singapore or Paris who might not otherwise encounter a Canadian listing.

Technology as a Competitive Lever

Alongside pricing discipline, Abbasi sees technology – and specifically AI – as the next area of competitive separation in luxury real estate. His background in digital platforms gives him a practical view of what these tools can do for agents and their clients.

AI-powered tools can handle market analysis, client communication, and listing optimization faster than manual methods, freeing agents to focus on relationship-building and high-value advisory work. “AI will make our top agents dramatically more powerful,” Abbasi says, “and it will also make average agents maybe obsolete.” Sotheby’s Canada is investing in proprietary tools like its internal Gateway platform, improving the consumer experience on sothebysrealty.ca – which already draws several hundred thousand visits per month – and planning a Canadian mobile app expected in Q4 of this year.

The goal is not to replace the human relationship at the center of luxury transactions, but to equip skilled agents with better tools for clients who expect a high level of service and market intelligence.

Looking Ahead

As the market moves through what Abbasi describes as a transitional period, the early signs from the spring 2026 season are modestly encouraging. Momentum is building, and the expectation reset that needed to happen – on both the buyer and seller side – appears to be underway.

“This is a very normal market,” he says. “When you look at what happened during the real estate boom, that was not normal. That was an anomaly.” Once that recalibration takes hold more broadly – with sellers pricing to current conditions and buyers recognizing that stability rather than frenzy defines a healthy market – the conditions for steadier, more sustainable activity are likely to follow. For the luxury segment specifically, constrained supply, returning international demand, and geographic diversification suggest the foundation is already in place.

About the Expert: Mustafa Abbasi is President of Sotheby’s International Realty Canada, bringing a rare combination of luxury real estate leadership and technology entrepreneurship to one of the country’s most recognized high-end brokerages. He previously founded Zolo, which grew into Canada’s largest digital real estate brokerage before being acquired by Questrade, and subsequently launched an AI-native fintech venture — experience that shapes his forward-looking perspective on both market dynamics and the role of technology in transforming the industry.

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.