The sands of BC real estate are expected to keep shifting in 2026, with residential woes contrasting with commercial optimism against a backdrop of capital flight and ballooning costs.

One developer in the region says the industry may see a “less-is-more approach” in 2026 with many large-scale projects being put on hold despite new rezonings to add density.

“The path forward in the short term is that homebuilders are going to focus on smaller, bite-sized types of projects,” said Matthew McClenaghan, president of Vancouver-based Edgar Development Ltd.

This could mean townhomes, income-producing properties and alternatives like hotels and senior housing. With less inventory for the market to absorb, BC cities need to work with developers to reduce fees, taxes and heavy amenity burdens, he said.

“If you can build homes in Metro Vancouver, you can build homes anywhere in the world,” McClenaghan said.

“We have to navigate some of the most complex building codes, policies, all that stuff. Not to mention, there’s over 20 municipalities that all have different policies and procedures.”

On the residential side, a correction shows no sign of letting up. Residential real estate prices in Metro Vancouver are expected to decline over the next year, according to a new internal survey by real estate franchise Royal LePage.

The Dec. 9 report said the median detached home price is expected to drop 5% from $1,695,700 in the fourth quarter of 2025 to $1,610,915 in the fourth quarter of 2026. The median condo price is expected to decline 3% over the same period from $734,900 to $712,853.

The company said these forecasts are based on the trend analyses and market knowledge of its experts.

“We’re coming down off of some remarkably high prices,” said Randy Ryalls, managing broker with Royal LePage Sterling Realty.

“Toronto and Vancouver are so expensive that there’s probably a little bit more of a correction that can happen here.”

There is a “really good” selection of properties for buyers, and interest rates “are probably as low as they’re going to go,” he said, with activity in the bond market driving longer-term mortgage rates to under four per cent, similar to pre-COVID levels.

Sellers, meanwhile, need to be realistic since pricing from a few years ago may no longer be attainable. Sellers who want to transact within 90 days need to be priced “to be next,” Ryalls said.

“If you’re priced in the middle of the pack, you probably won’t be successful.”

Commercial More Cheery

Things look rosier on the commercial side, with stability expected in 2026 according to an internal survey by Avison Young (Canada) Inc. released Dec. 8.

The commercial real estate firm said 95% of its Vancouver experts anticipate market activity to be the same or better in 2026 compared to the second half of 2025.

Broken down, 60% of them predict the same level of activity in 2026 and 35% expect an improvement, while five per cent expect lower performance.

Office real estate is showing encouraging signs of activity from both the leasing and sale perspectives, with professional services, banks and tech tenants buttressing the market, said Brett Armstrong, principal and Vancouver managing director with Avison Young.

“We’ve seen an uptick in leasing activity. I think that’s coupled with the whole return-to-office continuance trend, and also just some of the lack of quality supply that’s in the market,” he said, adding that many tenants are acting well in advance of lease expirations.

Industrial is an incredibly tight market due to Vancouver’s role as a trade and logistics gateway, said Shawna Rogowski, leader of the office’s market intelligence team. She said things are looking bright for the city’s commercial sector heading into 2026.

“I’m seeing optimism that I think we haven’t felt in quite a while, and really it’s just a vote of confidence in Vancouver and how it continues to just be a very stable, safe investment,” she said.

Capital Flight A Concern

Still, one real estate bigwig says he believes 2026 will be a challenging year for the sector.

“I think we’re in for a difficult year,” said Ross McCredie, chairman and CEO of Sutton Group Realty Services Ltd.

“What we’re really worried about is the lack of investment that’s coming into Western Canada and specifically BC, and the outflow of money from wealthy corporations or individuals. Capital is leaving the province right now.”

B.C.-based developers are pivoting to projects in US markets like Colorado, Texas and California, while government projects are eclipsing the private sector, he said.

Investment is being squeezed by policy and cost pressures, McCredie said.

“I’ve run a fairly large brokerage in California before this, and my cost base here [in BC] is about two-thirds more than it was in California, which is not a cheap place either,” he said.

“Our insurance costs here, simple things like broadband, your cell phone bill—all those things here in British Columbia and Canada are significantly higher than they are in the US, and that just makes us less competitive.”

Real Estate for 2026 : A Tale of Two Markets Emerges in BC by Jami Makan | BIV