British Columbia's real estate market is poised for a bifurcated year in 2026, with residential prices expected to continue their downward trend in Metro Vancouver, while the commercial sector anticipates stability and potential growth. This divergence is occurring against a backdrop of significant capital outflow and escalating development costs.
Key Takeaways
- Residential prices in Metro Vancouver are projected to fall, with detached homes down 5% and condos down 3% by the end of 2026.
- The commercial real estate sector, however, is optimistic, with 95% of experts predicting stable or improved market activity.
- Developers are shifting focus to smaller projects and exploring opportunities outside of B.C. due to high costs and complex regulations.
- Concerns about capital flight from Western Canada and B.C. are impacting investment in the region.
Residential Market Correction Continues
Metro Vancouver's residential real estate market is expected to see further price declines throughout 2026. Royal LePage's internal survey forecasts a 5% drop in the median detached home price, falling from approximately $1.7 million in late 2025 to just over $1.6 million by the end of 2026. Similarly, the median condo price is predicted to decrease by 3%, from $734,900 to $712,853.
Experts attribute these declines to a market coming down from historically high price points. With a good selection of properties available for buyers and interest rates potentially stabilizing, sellers are advised to price realistically to achieve timely sales. Pricing that was competitive a few years ago may no longer be attainable.
Commercial Sector Optimism
In contrast to the residential outlook, the commercial real estate sector in Vancouver is projecting a more positive trajectory for 2026. A survey by Avison Young indicates that 95% of its Vancouver experts anticipate market activity to remain the same or improve compared to the latter half of 2025. Specifically, 60% expect activity to be consistent, while 35% foresee an increase.
Office real estate is showing encouraging signs, driven by demand from professional services, banking, and tech sectors, alongside a trend of returning to the office and a lack of quality supply. The industrial sector remains robust, bolstered by Vancouver's crucial role as a trade and logistics hub. This optimism reflects a strong vote of confidence in Vancouver as a stable investment destination.
Challenges and Capital Flight Concerns
Despite the positive commercial outlook, some industry leaders express concern about the broader investment climate in British Columbia. A significant worry is the outflow of capital from Western Canada, with B.C.-based developers increasingly looking at U.S. markets like Colorado, Texas, and California for investment opportunities. This trend is exacerbated by high operational costs in B.C., including insurance, broadband, and mobile services, which are significantly higher than in the U.S., diminishing the province's competitiveness.
Developers are also facing pressures from complex building codes, varying municipal policies, and substantial fees and taxes. This environment is leading to a "less-is-more approach," with a focus on smaller, more manageable projects such as townhomes, income-producing properties, hotels, and senior housing, rather than large-scale developments.
