The best part about making predictions for a year ahead is that at the end of the year you get to look back with humility on what you were thinking at the time and realize how much you missed and how different things turned out.
So, what might happen in 2026?
Condominium development in Toronto: I think 2026 will be an important turning point year. If I keep saying this, at some point I'll be right, right? 2026 is the first year where we will start to see new condominium completions from the last cycle fall off significantly. Last year (2025), we were projecting nearly 32,000 condominium home completions. This year, it's projected to drop to ~17,487, with 2027 falling off even further as we head to almost no new supply (based on the current pipeline). What I think this means is that the first half of 2026 will still be painful as the market absorbs new inventory and the inventory from 2025 (including unsold units, units in default, and other scenarios), but that things will start to stabilize and feel better toward the end of 2026 and into 2027. New supply will now be delivering below the 10-year average for the first time in many years.
Purpose-built rental development in Toronto: The story since the condominium market turned in 2022 has been the flip to rental. But not all developers and sites can make this switch and, as I have argued before, the numbers suggest that it won't be enough to offset our dwindling new condominium supply. That said, I think rental rates will remain soft throughout 2026. The supply crunch we're headed toward will need a bit more time to be felt by the market. In the meantime, we will see the highly-amenitized purpose-built rental model fail. The strategy of using over-the-top amenities to drive high rents will finally fall apart in the current market environment. In its place will be a flight to value: boring rental models that offer a quality housing experience at reasonable prices.
Boutique end-user projects: In markets like Toronto and Vancouver, where the development landscape remains unfavourable, we will see a continued focus on smaller projects and projects catering exclusively to end-users. This demand segment is the most resilient and this re-orientation will help the next development cycle start on more solid footing.
Foreign buyer ban: The Canadian federal government will relax the foreign buyer ban (which is set to expire on January 1, 2027) and allow foreigners to buy pre-construction homes. There are already rumblings about this so I acknowledge this isn't that bold a prediction. But beyond just relaxing the ban, I think government will start actively courting foreign capital to help solve our housing needs.
AI bubble: 2026 will be the year that the AI bubble bursts. Not because AI isn't powerful tech that will continue to change the world, but because we are, in the words of investor Howard Marks, in an "inflection bubble." This is different from a fake bubble like Tulip Mania where there was ultimately no underlying reason for tulips to be valued so highly. An inflection bubble is where we get the direction right (AI is a big deal), but the magnitude wrong (shit, we overspent on CapEx). Not every AI company can and will survive. There will only be a select few once the dust settles. And since AI seems to be what's driving the market these days, I think the market will close the end of this year down (measured as the performance of the S&P 500).
Continued AI adoption: That said, AI will continue to change the way we all live and work. While this is going to put some people out of a job, my bias is an optimistic one in that new technologies tend to create new opportunities and generally grow the overall economy. However, I think that at least two enormous internet-type shifts are underway. One, AI is creating a massive productivity leverage for the people and firms that know how to harness it and, two, the backend of the global financial market is moving "onchain." These are profound shifts that I, unfortunately, think will lead to even more social and political division in the short term. A government somewhere in the world will respond with a universal basic income.
AI bubble impact on real estate: An AI bubble bursting will generally help the real estate market as investors look for returns somewhere else, with the exception of the data center market. It will also create downward pressure on interest rates (which, in the US, remain the highest they have been since the Great Recession in 2008). As we know, lower rates help boost the values of highly-levered assets like real estate.
AR/VR/AI for design and construction coordination: I was blown away the first time I tried Apple Vision Pro. It's a magical experience. But it has failed as a consumer product and who knows what Apple will launch next. Regardless, this year we will see clear use cases emerge for AR, VR, and smart glasses. I'd like to see the problems of design and construction coordination get immediately solved because they're massive and costly and they have yet to be solved.
Mainstream tokenization: In yesterday's post, I spoke about the lack of a breakout consumer-facing web3 app in 2025 (with honourable mention going to the Base app). But perhaps one of the big stories of last year was stablecoins entering the mainstream. Most people now agree they have achieved product-market fit. This is crypto solving real problems (cheap/fast cross-border remittances, payments, etc) with users not needing to think or care about the underlying blockchain technology. In 2026, we will see a noteworthy office building or apartment building get tokenized on the Ethereum blockchain.
Autonomous vehicles: Last year, I predicted that autonomous vehicles were going to have a year, and it certainly felt that way. This year will be the first year that I ride in one. I came close on a layover in San Francisco in December. I considered leaving the airport and taking one to Apple Park. But I would have been cutting it too close. In 2026, we will see an insurer refuse to cover a human driver for the first time, marking a clear global shift toward autonomy. Already, none of us should be driving cars anymore looking at current safety data.
Polycentric world: Some have argued that 2025 marked the end of globalization. I'm not sure that is accurate. I think it marked the end of the US-led post-war world order and the acceleration of a more polycentric world order. It was the start of greater US insularity. In 2026, Canada will start to see the benefits of this shift. What it is doing is shaking us out of complacency and forcing us to look east to Europe and west to Asia, as opposed to just south to the US.
What are your predictions for the year ahead?
Happy New Year! And welcome to another year of this daily blog. (In August of this year, we'll enter the 14th year of this daily practice.)
Exactly a year ago, I published a post talking about what might happen in 2025. It was last year's prediction post. Today, let's see how I did.
Real estate development: I admitted that I had been overly optimistic in terms of how soon the market would reset (specifically Toronto). But I did still argue that 2025 would be an important turning point in terms of people capitulating and more legacy assets/deals getting reset. I think we did start to see this. We looked at a number of receivership sites and came across many instances where a landowner would take 40-50% of what they paid. The problem is that the market still hasn't fully reset and we're still in the midst of absorbing our current housing supply pipeline. So while it sounds nice to buy something for $0.40 on the dollar, what do you then do with it?
Return-to-office: I said that we would see the average weekly occupancy index in downtown Toronto reach 90% by the end of 2025 (it was 73% when I wrote the post a year ago). As of November 2025, it was 82%. Not quite.
Autonomous vehicles: I reversed my position (relative to the prior year) and said that autonomous vehicles are way further along than most people thought, at least at the time. And boy, was 2025 a great year for Waymo. It feels like they're now in scaling mode.
EU carbon permits: A year ago, they were priced at €71.98 per tonne of carbon dioxide, compared to an all-time high of €105.73 in February of 2023. I guessed that they'd be between €90 and €100 by the end of 2025. Right now they're at €87.28.
Crypto: I thought that 2025 would be a good year for crypto given the MAGA movement's support for it. For a while, it seemed like that would be the case. But if I look at the price of Ethereum, it's down 15.21% year-to-date. So not what I predicted. But I continued to dollar-cost average.
I'm a big fan of the period between Christmas and when most of the world gets back to work in the New Year. It's the only time of year that I know of where the email firehose shuts off, the social permission to do "nothing" turns on, and the world generally quiets down.
I know that not everyone gets this time off. We all have different jobs. Earlier in my career, I used to always work these days between Christmas and the New Year because I couldn't spare the vacation days. But if you are fortunate enough to have it off, it's a unique time of the year.
It's a time for family and friends, and a good time for vacations that aren't riddled with email and work anxiety. But it's also a time that creates space for the mind to wander, and for me, it gives me a creative burst of energy.
I've been trying to think of the best way to describe this feeling, and it truly feels like "mental space." When work is "on," it simply crowds out everything else. But a more accurate neuroscientific definition would be that we're simply engaging different parts of our brains.
Supposedly, when the mind is given "space" to wander — which is also referred to as wakeful rest — we engage a system in our brain known as the Default Mode Network. This network is thought to serve several different functions, including forming the basis for the self, thinking about others, remembering past events, and imagining possible future events. Generally, this makes it very good at connecting the dots, so to speak.
The counterpart network is our Executive Control Network. This part of our brain is most active during focused, demanding, and goal-oriented tasks — so work.
These two networks are also thought to be inversely correlated, meaning when one activates, the other often shuts down. But not always and not entirely. A 2018 research article by Roger E. Beaty et al. found that highly creative people have a unique brain "wiring" that allows these different neural networks to work together, rather than in opposition.
What this suggests to me, as a cognitive neuroscience layperson, is that engaging our different brain networks is good for us. Sometimes it's good to turn down executive control and give some space to default mode.
The best part about making predictions for a year ahead is that at the end of the year you get to look back with humility on what you were thinking at the time and realize how much you missed and how different things turned out.
So, what might happen in 2026?
Condominium development in Toronto: I think 2026 will be an important turning point year. If I keep saying this, at some point I'll be right, right? 2026 is the first year where we will start to see new condominium completions from the last cycle fall off significantly. Last year (2025), we were projecting nearly 32,000 condominium home completions. This year, it's projected to drop to ~17,487, with 2027 falling off even further as we head to almost no new supply (based on the current pipeline). What I think this means is that the first half of 2026 will still be painful as the market absorbs new inventory and the inventory from 2025 (including unsold units, units in default, and other scenarios), but that things will start to stabilize and feel better toward the end of 2026 and into 2027. New supply will now be delivering below the 10-year average for the first time in many years.
Purpose-built rental development in Toronto: The story since the condominium market turned in 2022 has been the flip to rental. But not all developers and sites can make this switch and, as I have argued before, the numbers suggest that it won't be enough to offset our dwindling new condominium supply. That said, I think rental rates will remain soft throughout 2026. The supply crunch we're headed toward will need a bit more time to be felt by the market. In the meantime, we will see the highly-amenitized purpose-built rental model fail. The strategy of using over-the-top amenities to drive high rents will finally fall apart in the current market environment. In its place will be a flight to value: boring rental models that offer a quality housing experience at reasonable prices.
Boutique end-user projects: In markets like Toronto and Vancouver, where the development landscape remains unfavourable, we will see a continued focus on smaller projects and projects catering exclusively to end-users. This demand segment is the most resilient and this re-orientation will help the next development cycle start on more solid footing.
Foreign buyer ban: The Canadian federal government will relax the foreign buyer ban (which is set to expire on January 1, 2027) and allow foreigners to buy pre-construction homes. There are already rumblings about this so I acknowledge this isn't that bold a prediction. But beyond just relaxing the ban, I think government will start actively courting foreign capital to help solve our housing needs.
AI bubble: 2026 will be the year that the AI bubble bursts. Not because AI isn't powerful tech that will continue to change the world, but because we are, in the words of investor Howard Marks, in an "inflection bubble." This is different from a fake bubble like Tulip Mania where there was ultimately no underlying reason for tulips to be valued so highly. An inflection bubble is where we get the direction right (AI is a big deal), but the magnitude wrong (shit, we overspent on CapEx). Not every AI company can and will survive. There will only be a select few once the dust settles. And since AI seems to be what's driving the market these days, I think the market will close the end of this year down (measured as the performance of the S&P 500).
Continued AI adoption: That said, AI will continue to change the way we all live and work. While this is going to put some people out of a job, my bias is an optimistic one in that new technologies tend to create new opportunities and generally grow the overall economy. However, I think that at least two enormous internet-type shifts are underway. One, AI is creating a massive productivity leverage for the people and firms that know how to harness it and, two, the backend of the global financial market is moving "onchain." These are profound shifts that I, unfortunately, think will lead to even more social and political division in the short term. A government somewhere in the world will respond with a universal basic income.
AI bubble impact on real estate: An AI bubble bursting will generally help the real estate market as investors look for returns somewhere else, with the exception of the data center market. It will also create downward pressure on interest rates (which, in the US, remain the highest they have been since the Great Recession in 2008). As we know, lower rates help boost the values of highly-levered assets like real estate.
AR/VR/AI for design and construction coordination: I was blown away the first time I tried Apple Vision Pro. It's a magical experience. But it has failed as a consumer product and who knows what Apple will launch next. Regardless, this year we will see clear use cases emerge for AR, VR, and smart glasses. I'd like to see the problems of design and construction coordination get immediately solved because they're massive and costly and they have yet to be solved.
Mainstream tokenization: In yesterday's post, I spoke about the lack of a breakout consumer-facing web3 app in 2025 (with honourable mention going to the Base app). But perhaps one of the big stories of last year was stablecoins entering the mainstream. Most people now agree they have achieved product-market fit. This is crypto solving real problems (cheap/fast cross-border remittances, payments, etc) with users not needing to think or care about the underlying blockchain technology. In 2026, we will see a noteworthy office building or apartment building get tokenized on the Ethereum blockchain.
Autonomous vehicles: Last year, I predicted that autonomous vehicles were going to have a year, and it certainly felt that way. This year will be the first year that I ride in one. I came close on a layover in San Francisco in December. I considered leaving the airport and taking one to Apple Park. But I would have been cutting it too close. In 2026, we will see an insurer refuse to cover a human driver for the first time, marking a clear global shift toward autonomy. Already, none of us should be driving cars anymore looking at current safety data.
Polycentric world: Some have argued that 2025 marked the end of globalization. I'm not sure that is accurate. I think it marked the end of the US-led post-war world order and the acceleration of a more polycentric world order. It was the start of greater US insularity. In 2026, Canada will start to see the benefits of this shift. What it is doing is shaking us out of complacency and forcing us to look east to Europe and west to Asia, as opposed to just south to the US.
What are your predictions for the year ahead?
Happy New Year! And welcome to another year of this daily blog. (In August of this year, we'll enter the 14th year of this daily practice.)
Exactly a year ago, I published a post talking about what might happen in 2025. It was last year's prediction post. Today, let's see how I did.
Real estate development: I admitted that I had been overly optimistic in terms of how soon the market would reset (specifically Toronto). But I did still argue that 2025 would be an important turning point in terms of people capitulating and more legacy assets/deals getting reset. I think we did start to see this. We looked at a number of receivership sites and came across many instances where a landowner would take 40-50% of what they paid. The problem is that the market still hasn't fully reset and we're still in the midst of absorbing our current housing supply pipeline. So while it sounds nice to buy something for $0.40 on the dollar, what do you then do with it?
Return-to-office: I said that we would see the average weekly occupancy index in downtown Toronto reach 90% by the end of 2025 (it was 73% when I wrote the post a year ago). As of November 2025, it was 82%. Not quite.
Autonomous vehicles: I reversed my position (relative to the prior year) and said that autonomous vehicles are way further along than most people thought, at least at the time. And boy, was 2025 a great year for Waymo. It feels like they're now in scaling mode.
EU carbon permits: A year ago, they were priced at €71.98 per tonne of carbon dioxide, compared to an all-time high of €105.73 in February of 2023. I guessed that they'd be between €90 and €100 by the end of 2025. Right now they're at €87.28.
Crypto: I thought that 2025 would be a good year for crypto given the MAGA movement's support for it. For a while, it seemed like that would be the case. But if I look at the price of Ethereum, it's down 15.21% year-to-date. So not what I predicted. But I continued to dollar-cost average.
I'm a big fan of the period between Christmas and when most of the world gets back to work in the New Year. It's the only time of year that I know of where the email firehose shuts off, the social permission to do "nothing" turns on, and the world generally quiets down.
I know that not everyone gets this time off. We all have different jobs. Earlier in my career, I used to always work these days between Christmas and the New Year because I couldn't spare the vacation days. But if you are fortunate enough to have it off, it's a unique time of the year.
It's a time for family and friends, and a good time for vacations that aren't riddled with email and work anxiety. But it's also a time that creates space for the mind to wander, and for me, it gives me a creative burst of energy.
I've been trying to think of the best way to describe this feeling, and it truly feels like "mental space." When work is "on," it simply crowds out everything else. But a more accurate neuroscientific definition would be that we're simply engaging different parts of our brains.
Supposedly, when the mind is given "space" to wander — which is also referred to as wakeful rest — we engage a system in our brain known as the Default Mode Network. This network is thought to serve several different functions, including forming the basis for the self, thinking about others, remembering past events, and imagining possible future events. Generally, this makes it very good at connecting the dots, so to speak.
The counterpart network is our Executive Control Network. This part of our brain is most active during focused, demanding, and goal-oriented tasks — so work.
These two networks are also thought to be inversely correlated, meaning when one activates, the other often shuts down. But not always and not entirely. A 2018 research article by Roger E. Beaty et al. found that highly creative people have a unique brain "wiring" that allows these different neural networks to work together, rather than in opposition.
What this suggests to me, as a cognitive neuroscience layperson, is that engaging our different brain networks is good for us. Sometimes it's good to turn down executive control and give some space to default mode.
Web3: I went on to predict that we would see a breakout web3 consumer app in 2025. I also mentioned that I was impressed by NFT marketplaces like Rodeo. Well, Rodeo has gone on to mostly die and I'm not sure it would be fair to say that there was anything that crossed over into the mainstream. I'm going to give myself a zero for this one. But if I had to pick something, I would say that Coinbase's "Base App" represents meaningful progress. Base continues to dominate the Ethereum Layer 2 market. It's fast and cheap.
I wish you all a healthy, prosperous, and fulfilling 2026.
Cover photo by Jamie Fenn on Unsplash
And I find that this time of year is a perfect time to do just that.
Cover photo by Milad Fakurian on Unsplash
Web3: I went on to predict that we would see a breakout web3 consumer app in 2025. I also mentioned that I was impressed by NFT marketplaces like Rodeo. Well, Rodeo has gone on to mostly die and I'm not sure it would be fair to say that there was anything that crossed over into the mainstream. I'm going to give myself a zero for this one. But if I had to pick something, I would say that Coinbase's "Base App" represents meaningful progress. Base continues to dominate the Ethereum Layer 2 market. It's fast and cheap.
I wish you all a healthy, prosperous, and fulfilling 2026.
Cover photo by Jamie Fenn on Unsplash
And I find that this time of year is a perfect time to do just that.
Cover photo by Milad Fakurian on Unsplash
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