Why Renting in 2026 May Beat Buying

The “New Year’s special” for a two-bedroom unit in a midtown Toronto high-rise — offering up to three months of free rent plus a $500 move-in bonus — might be the first thing you notice when hunting for a new place. In central Vancouver, some listings include a year of free internet and two months of complimentary rent. Across Canada, landlords are increasingly offering perks such as free parking, waived pet fees, and moving allowances to attract tenants.

After a post-pandemic surge in rental costs, market conditions are shifting. Falling rents, rising vacancy rates and broader uncertainty in the housing market have helped tilt negotiating power back toward renters. Brokers and analysts say many landlords are now competing aggressively to fill units as new supply comes online and some prospective buyers pause their purchase plans.

“It feels like a race to the bottom,” said Marco Pedri, a Toronto broker with Shoreline Realty who focuses on leasing. “There is a growing inventory of new buildings, and landlords are competing with one another, which is pushing prices down.”

Rental supply expands while demand shifts toward leasing

This trend looks set to continue for the coming year. After 2025 produced the second consecutive record for rental housing starts in Canada, many projects are now completing, adding more units to the market and giving renters greater choice. Mathieu Laberge, chief economist at the Canada Mortgage and Housing Corporation (CMHC), has noted that the economics currently favor rental projects over some large ownership developments.

With more listings and softer prices, the key question is whether renter demand will rise in 2026. Some real estate professionals say that shift is already underway. Tom Storey of Royal LePage Signature Realty reports that 2025 was one of his team’s busiest years for leasing. He observed that many clients who might otherwise have entered the resale market instead chose to rent, as buyers waited to see where prices and interest rates would settle.

“The need for housing hasn’t changed, but more people accessed it through leasing in 2025 rather than buying,” Storey said. Declining sales prices and lower interest rates encouraged some potential buyers to hold off, and softer starting rents in 2025 compared with prior years made renting a more attractive short-term option.

Rents continue to fall, yet affordability remains a concern

Data compiled from listings networks show that December 2025 marked the 15th straight month of year-over-year declines in average asking rents nationally. Overall asking rents in Canada fell about 3.1% in 2025 and are approximately 5.4% lower than two years earlier. City-level changes included declines in Vancouver, Toronto and Calgary, while Montreal and Ottawa registered more modest dips.

Even so, affordability pressures persist. The national average asking rent stood around $2,060 in the most recent month — down slightly year over year, but still roughly 3% higher than three years ago and about 14% above pre-pandemic levels in December 2019. For many households, rents remain a significant portion of monthly income despite the easing trend.

Giacomo Ladas, a spokesperson for Rentals.ca, noted that property managers are facing a twofold challenge: a surge of new supply and a relatively shallow pool of renters. Immigration policy adjustments that slowed population growth, seasonal slowdowns in demand, and a general hesitancy among some households have contributed to weaker rental uptake, putting downward pressure on asking prices and prompting landlords to offer incentives.

“More supply is still coming,” Ladas said, pointing to hundreds of thousands of units under construction across Canada. With population growth slowing in some periods, demand is not expected to accelerate quickly, which will likely keep vacancies elevated in the near term.

Economic uncertainty has dampened movement by renters and buyers

Last year’s economic and trade uncertainties also affected real estate activity. In some regions, trade disputes and other economic concerns reduced the number of resale transactions compared with initial forecasts. Many prospective first-time buyers adopted a wait-and-see stance, preferring to remain in rentals rather than commit to purchases during a period of market volatility.

Renters, likewise, showed less willingness to accept premium rents, even as developers pushed forward with purpose-built rental projects that had already been financed. The result was lower turnover and a moderation in rental growth. CMHC reported that vacancy rates for purpose-built rental apartments rose, reflecting slower turnover and increased availability in the fall compared with the previous year.

2026 shaping up as a renter-friendly year

CMHC expects 2026 to remain renter-friendly in many Canadian markets. As additional supply is absorbed and incomes gradually catch up to previous rent increases, turnover rents are likely to soften further, improving market fluidity and giving tenants more negotiating power.

For renters, the shift means greater freedom to focus on location and amenities rather than being compelled to accept less desirable options due to price pressure. Many tenants are taking advantage of lower asking rents to secure rent-controlled or stable leases where available, locking in more predictable housing costs.

“I don’t foresee landlords raising rents dramatically this year,” Pedri said. “More landlords appear to be prioritizing long-term tenant relationships over squeezing every last dollar.”

Read more about real estate:

• How does rent from a family member or common-law partner get taxed?
• How much is your home really worth?
• How much income do you need to buy a home in Canada? A look at housing affordability in November 2025
• How to choose the best appraisal firm