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The Bubble Is Deflating
Toronto and Vancouver keep sliding, affordability relief is fading, and insolvencies are creeping higher.
Today, we’re covering
🫧 UBS Flags Toronto & Vancouver
💰 CMHC Financing Carries the Load
⏪ Home Prices Are Back to 2016, Sort Of
🧱 Affordability Hits a Wall
🤔 WTF of The Week
Read Time: 4 minutes
🫧 UBS Flags Toronto & Vancouver
The 411: Toronto and Vancouver remain in UBS’s moderate bubble-risk category, but both were among the weakest housing markets in the study, with inflation-adjusted prices falling roughly 10% over the past year.
Toronto’s real home prices are now nearly 30% below their 2022 peak after previously doubling between 2014 and 2022.
UBS puts Toronto’s 2026 bubble-risk score at 0.63, down from last year as higher rates, the foreign-buyer ban and increased supply cooled the market.
Vancouver scored 0.62 and has seen real prices fall about 20% from their 2022 peak, including nearly 10% since mid-2025.
Vancouver home sales have dropped to a 25-year low while listings remain well above their long-term average.
UBS says the estimated cost of owning remains substantially above renting in Vancouver and is also elevated in Toronto, making future price appreciation an important part of the financial case for buying.
Why This Matters: Canada’s two biggest housing-market heavyweights are no longer dealing with runaway prices. They’re dealing with elevated inventory, weaker demand and a much tougher ownership equation. The correction has improved valuations, but buyers have not exactly rushed back to the checkout.
