2026 Real Estate Outlook: Buyer Opportunities, Deposit Risks & Costly Tax Pitfalls
As we move through 2026, the Canadian real estate market is entering a unique phase. Activity is expected to increase, but pricing is likely to remain relatively flat, creating a strategic window for informed buyers and cautious sellers.
At Modern Solution Realty, we believe that success in today’s market is about more than just price. Deposits, legal clauses, taxes, and final walkthroughs can all have serious financial consequences if not handled correctly. Below is a breakdown of what buyers and sellers should know this year.
For professional guidance tailored to your situation, contact Modern Solution Realty at 905-897-5000.
Winter Conditions: Why Preparation Still Matters
Winter weather can hide major property issues such as foundation cracks, grading problems, and exterior damage. Snow removal is not just about curb appeal—it is also about safety and liability.
Sellers must ensure driveways, walkways, and entrances are consistently shovelled, salted, and properly maintained. Failure to do so can expose homeowners and brokerages to potential legal risk if an accident occurs during a showing or open house.
What the 2026 Housing Market Is Shaping Up to Be
National data shows that home sales declined year-over-year at the end of 2025, even with interest rate reductions from the Bank of Canada. Ongoing economic uncertainty, employment concerns, and global trade pressures have kept many buyers cautious—particularly in Ontario and British Columbia.
That said, market conditions vary significantly across the country:
- Quebec City has seen continued price growth
- Prairie and Atlantic markets remain relatively stable
- Toronto and Vancouver are near historic sales lows
Looking ahead, market activity is expected to improve as the year progresses, but significant price increases are unlikely in most major urban markets.
Why 2026 May Be a Buyer-Friendly Opportunity
Approximately 1.6 to 1.7 million Canadian mortgages are set to renew in 2025 and 2026. Many of these homeowners secured historically low interest rates in 2020 and 2021.
Renewing at today’s higher rates may result in substantially increased monthly payments. As a result:
- Some homeowners may choose to downsize
- Others may decide to sell
- In some cases, power of sale situations may arise
For buyers with stable employment and solid financing, this environment can offer less competition and stronger negotiating power.
Buying and Selling at the Same Time
Market conditions affect both sides of a transaction. When prices are high, sellers benefit but often pay more when buying their next home. When prices are flat, sellers may not see large gains—but buyers often benefit on the purchase side.
For clients who are both buying and selling in the same market, these factors often balance out. The key is proper planning, realistic budgeting, and securing a strong mortgage pre-approval early in the process.
Why Ontario’s Deposit System Can Be Risky
In Ontario, real estate deposits are held in trust once an offer is accepted. If a deal collapses because conditions are not fulfilled, the deposit is not automatically returned to the buyer.
Instead, both parties must sign a mutual release. If one party refuses, the deposit can remain locked in trust indefinitely—even if the buyer acted in good faith.
This can result in buyers needing legal action simply to recover their own funds. Proper legal wording in the Agreement of Purchase and Sale is essential to avoid this risk.
Clauses That Protect Buyers and Sellers
Well-drafted clauses can clearly outline what happens to the deposit if a deal does not close.
- For buyers: clauses can ensure deposits are automatically returned if conditions are not met
- For sellers: clauses can confirm deposits are forfeited if buyers fail to close without justification
These protections are not standard templates—they are based on experience and careful legal planning.
The Real Cost of Real Estate Tax Mistakes
Tax treatment on resale depends heavily on how a property has been used.
Properties that have been used for:
- Short-term rentals (such as Airbnb)
- Commercial purposes
- Office or business conversions
may be subject to HST upon resale, even if the buyer intends to use the property as a primary residence.
Incorrectly listing a property as HST-inclusive rather than plus HST can cost sellers tens of thousands of dollars at closing. Always consult with tax and real estate professionals before listing.
Why Final Walkthroughs Are Non-Negotiable
A final walkthrough should take place as close to closing as possible. This is not a second inspection—it is confirmation that the property is in the same condition as when the offer was accepted.
Common issues discovered during walkthroughs include:
- Flooding after storms
- Removed or missing fixtures
- Damage to walls or flooring
- Items that should have remained with the property
Even small oversights can result in last-minute price adjustments or delays.
What Stays and What Goes When You Sell
A simple rule of thumb:
If you turn the house upside down and it stays attached, it stays with the house.
Anything screwed, bolted, or permanently affixed must remain unless clearly excluded in writing. This includes light fixtures, mounted shelves, and built-in appliances. Failing to clarify inclusions and exclusions can lead to disputes or financial penalties.
Final Thoughts
Real estate transactions are about much more than the sale price. Deposits, taxes, legal wording, and final walkthroughs can all have major financial consequences.
Experience and preparation matter—especially in a market where deals can be more complex and margins are tighter.
For trusted advice and strategic guidance in 2026, contact Modern Solution Realty at 905-897-5000.
Frequently Asked Questions
Will home prices increase in 2026?
Market activity is expected to improve, but prices are likely to remain relatively flat in many areas.
Can a seller keep my deposit if conditions fail?
Yes, under Ontario’s current system, unless clear protective clauses are included.
Do Airbnb properties pay HST when sold?
Often yes, depending on how the property was used.
Is a final walkthrough really necessary?
Absolutely. It protects buyers from last-minute damage or missing items.
What happens if a buyer does not close?
Without proper clauses, deposits can remain tied up for months or even years.
