The buyers are out there. They’re just waiting. And according to a new TD Economics report released Thursday, the window for winning them over may finally be opening.

Economist Rishi Sondhi says a pool of pent-up demand is waiting in the wings in markets across Canada, particularly in Ontario and BC, and that improved economic conditions and affordability gains could help unlock it heading into 2027.

The catch? Getting through 2026 first.

Sondhi is candid about how much the year has already stumbled. A weaker-than-expected fourth quarter in 2025 and a particularly rough start to 2026 have forced TD to sharply downgrade its forecasts for both home sales and price growth this year. Severe weather in Central and Atlantic Canada was partly to blame for the slow start, but Sondhi noted that weakness was also evident in BC, “where conditions were more temperate” — meaning weather wasn’t the whole story.

Sales “are likely to take most of the year to recoup first quarter losses,” the report said, held back by a sluggish economy, heightened uncertainty and cost of living pressures that haven’t eased enough to bring buyers back with confidence. Interest rates offer little in the way of relief or further drag: the Bank of Canada is expected to hold steady through the end of 2026, with no major moves anticipated in bond yields either.

A Country Pulling in Different Directions

One of the more striking findings in Sondhi’s report is just how differently the country is performing from one province to the next.

Canada’s population actually shrank last year for the first time since Confederation, driven by significant declines in Ontario and BC, the economist writes. Softer rental demand and falling rents in both provinces are discouraging investors, adding pressure on top of already strained affordability. “Pent-up demand has yet to re-emerge as quickly as previously expected,” the report noted, which suggests further price declines may still be needed to unlock it.

Alberta is a different story. The province leads the country in population growth, fuelled by immigration and a steady flow of interprovincial migrants. That in-migration is translating into real housing demand, and Alberta’s markets have rebalanced after a period of rapid supply growth.

The Greater Toronto Area’s condo market stands out as the weakest in the country, with “elevated supply needing to be absorbed before prices stabilize.” Buyers hold the advantage across the GTA, the commuter belt, and Southwestern Ontario, while conditions are somewhat firmer in Eastern Ontario and considerably tighter in Northern Ontario.

Oil Surge Adds A wild Card

Oil prices have shot up amid Middle East tensions, and Sondhi’s report treats that as a genuine mixed bag for Canada.

TD’s working assumption is that the conflict proves shorter-lived, with oil prices moderating after peaking in the second quarter but remaining above the bank’s December forecast for the rest of the year. That’s good news for Alberta, Saskatchewan and Newfoundland and Labrador. Sondhi’s models suggest average home prices in Alberta could end 2026 roughly one per cent higher than they would have been if oil had tracked December forecasts, with about half that gain pencilled in for Saskatchewan. Newfoundland and Labrador could see a similar lift, with some added upside given how tight that market already is.

The flip side is that rising energy costs eat into purchasing power across the rest of the country, which could weigh on housing demand in provinces that import oil.

Atlantic Canada Holds Up, Quebec Faces A Tougher Second Half

In Atlantic Canada, Newfoundland and Labrador is expected to lead the region in price growth this year, a repeat of its 2025 performance. Higher oil prices, tight market conditions and still-affordable housing all help, and the province’s economy is relatively shielded from US trade friction.

Interprovincial migrants are still flowing into Prince Edward Island and Nova Scotia, supporting demand and prices in both provinces. New Brunswick is the outlier in the region: falling interprovincial migration is behind TD’s view of more modest price gains there.

Quebec enters the year in decent shape, with tight supply-demand balances expected to support solid price growth for the next few months. But a softening economy and a cooling jobs market are expected to weigh on both sales and prices as the year progresses.

Across the Prairies, Manitoba and Saskatchewan remain tighter than Alberta, with more limited supply growth. Combined with relatively strong affordability in Saskatchewan, those conditions should support firmer price gains in both provinces.

Where The Risks Lie

Sondhi is careful to note that the outlook could shift in either direction. A longer or broader Middle East conflict would help oil-producing regions but hurt energy importers more. And on the upside, pent-up demand in Ontario and BC “could be unleashed faster or more forcefully than expected.” The looming renegotiation of the Canada-United States-Mexico Agreement is also flagged as a wildcard for the broader economy, and by extension, housing.

For now, patience seems to be the watchword. The market hasn’t found its bottom yet in many parts of the country, but TD’s view is that when it does, the buyers waiting on the sidelines won’t stay there for long.

TD Cuts Housing Forecast But Warns Pent-Up Demand Could Be “Unleashed Faster or More Forcefully than Expected” by REM Real Estate Magazine