You know those headlines about people not going back to the office? Sure, that's part of the story. But what if declining transit ridership is actually warning us about something deeper happening in Canadian real estate markets, something that only shows up once every few generations?

Public transit and real estate prices have always been linked. If you can hop on a train and get downtown fast, your home is worth more. Simple as that. Developers bet on it, buyers pay for it, cities plan around it. The whole system works because transit saves people time, and time is money.

But right now, transit revenues in Canada have climbed back to 2019 levels while ridership remains 18% below pre-pandemic numbers. That's a strange split. And it matters more than most people realize.

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The Numbers Don't Add Up

Canadian cities pulled in $352.8 million from transit fares in September 2025, just shy of where they were before COVID hit. Revenue is basically back. Meanwhile, Canadians took 134.5 million transit trips that month, down nearly 30 million from September 2019.

Here's what makes this weird: Canada added 3.85 million people between 2019 and 2025. If even half of those newcomers took transit twice per weekday, you'd expect ridership to be way up, not down. Something's pushing people away from public transit even as the country grows.

Remote work gets blamed for a lot of this. Fair enough. But look closer and you'll see the same patterns showed up during real estate bubbles in the 1980s and 1990s, when nobody had Zoom meetings to worry about. People moved to car-dependent suburbs not because they wanted longer commutes, but because they couldn't afford to stay near transit.

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When Transit Premiums Break Down

Living near good transit costs extra. Always has. But that premium only makes sense up to a point. Research from the UK found that home prices near new transit lines tend to front-load their gains, then stagnate for 15 years after opening. The location might still be great, but eventually the premium becomes too expensive compared to what you actually get.

When housing prices rise faster than incomes, households that actually depend on transit, the ones who need it to get to work, start looking at different tradeoffs. Move farther out, get a car, trade time for affordability and space. The inefficiency stings, but so does being priced out of the neighborhoods you need to access.

There's a second layer to this. The people who can still afford transit-adjacent homes today often earn enough that public transit isn't really a necessity for them. It's an option. Add 20 minutes to a daily commute and you lose 174 hours per year. At Canada's average wage, that's equivalent to $6,300 in lost labor, though frankly that wage wouldn't support ownership in most transit-rich neighborhoods anyway.

Someone earning $100 an hour might still take the subway sometimes. But they're not core transit users. They have choices. And that shift in who lives near transit changes what gets demanded and how the system performs.

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Understanding Economic Cycles

Most people think about business cycles, the 10-year expansions and recessions driven by credit and borrowing. Real estate follows that rhythm: things heat up, peak, cool down, recover. Right now, with cooling credit growth, rising insolvencies, and stubborn inflation, Canada looks like it's just past a cyclical peak.

But there are longer cycles too. Secular cycles, running 20 to 30 years, track generational shifts. Think about Millennials, the generation that urbanized heavily, embraced transit, delayed homeownership. As they age, their needs change. Families want space. Commuting patterns shift. Housing demand moves.

Then there are structural cycles, the 40 to 60 year waves driven by fundamental technological change. Steam power. Cars. Computers. These long booms come with massive infrastructure investment, surging prices, and claims that "this time it's different" because supply can't keep up with demand. Policymakers respond by building more of what seemed scarce. But by the time all that new capacity comes online, technology has shifted and what looked essential suddenly doesn't anymore.

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Three Cycles Ending At Once

What makes the current moment unusual is timing. All three cycles appear to be converging.

Cyclically, real estate valuations are stretched, especially for properties near transit. Normally, a correction happens, things reset, efficiency returns. But this time there's more going on.

On the secular side, Millennials are aging out of their core transit-using years. The generation that drove demand for urban living and public transit is changing behavior. They're having kids (or not), looking for different housing types, making different transportation choices. These aren't temporary pandemic effects—they're generational timeline shifts.

And structurally, we're potentially near the end of a long wave. Decades of investment in transit infrastructure, dense development, transit-oriented design. All premised on patterns that reflected how an older, larger demographic thought younger people would live. But behavioral shifts, new technology, remote work tools, changing urban economics—these are altering how cities function in ways that could persist.

When you get all three cycles peaking or turning at once, markets don't adjust gradually. They snap.

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What This Means for Real Estate

Transit proximity has driven premium pricing for decades. Toronto's urban, transit-connected neighborhoods remain among the most desirable, with buyers paying top dollar for accessibility. But if the core users of transit are being priced out, and if the people who can afford those locations have other options, what happens to that premium?

Ontario home prices have dropped 5.1% year-over-year as of October 2025, the largest decline among Canadian provinces. Meanwhile, Quebec's housing market continues to strengthen, with benchmark prices hitting record highs despite being less focused on the transit-premium model that dominates Toronto and Vancouver.

Regional differences matter. Calgary and Saskatchewan have shown surprising resilience, partly because they never developed the same degree of transit dependency or transit-driven pricing. Alberta saw prices cool from overheated levels, but the correction there looks different than what's happening in transit-centric markets.

Vancouver and Toronto both face soft condo markets with elevated inventory, especially in towers marketed around transit access. British Columbia saw building permits climb 7.9% recently, but that construction is competing with shifting demand patterns.

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Policy Responses Missing the Point

Governments and transit agencies generally view falling ridership as a short-term operational problem. They assume ridership will bounce back once offices reopen fully or fares become more affordable. Ottawa's mayor recently called the situation a "transit crisis", pointing to budget shortfalls and service challenges.

But framing this as a funding issue misses what's actually happening. Revenues are up. Service capacity exists. The problem is that behavior has changed in ways that may not reverse easily. People who moved to car-dependent suburbs during the pandemic aren't necessarily coming back. Young adults migrating from Ontario to Alberta in record numbers aren't doing it because Toronto lacks bus lanes.

Policy responses keep doubling down on the old model. More density near transit. More incentives for transit-oriented development. Mortgage rule changes that let buyers stretch further into 30-year amortizations to afford premium locations. These might help at the margins, but they don't address the underlying mismatch between where housing is being built, how much it costs, and whether the people who need it can actually afford to live there.

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Looking at Where Markets Might Go

Nobody knows exactly how this plays out. Real estate cycles are messy and regional differences matter enormously. But a few things seem likely.

Transit-adjacent properties in Toronto and Vancouver may continue facing pressure. These markets posted the steepest benchmark price drops nationally, and their condo sectors remain oversupplied with weak absorption. If transit demand stays soft, the premium for those locations could compress further.

Mid-sized cities and provinces that didn't overinvest in transit premiums might show more stability. Montreal's market keeps surprising people with strength, partly because it never reached Vancouver or Toronto price levels and partly because its housing stock offers better affordability without sacrificing accessibility.

Suburban and exurban markets that traded off transit access for space and lower costs might hold value better than expected. Remote work normalized during the pandemic, but even without it, the math of housing affordability pushes people toward those tradeoffs when urban prices get too high.

And longer term, if this really is a structural cycle shift, expect to see fundamental changes in where development happens, what gets built, and how cities organize themselves. Infrastructure investments made for one era don't always transfer well to the next.

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What Real Estate Buyers and Sellers Should Consider

If you're thinking about buying, transit proximity still matters—it's not worthless. But maybe don't pay an infinite premium for it. Look at what you're actually getting for the money. A condo near a subway station isn't necessarily a better long-term investment than a townhouse with parking somewhere more affordable if the price gap is massive.

For sellers in transit-rich neighborhoods, especially condos, understand that you're competing in a market where supply is elevated and buyer psychology has shifted. Pricing aggressively might be necessary to move property.

Investors should think carefully about assumptions. If your investment thesis depends on continued transit-driven demand growth, that might need revisiting. Rental properties near transit might face softer yields if the renter demographic using transit is shrinking or shifting.

And honestly, in this environment, having options matters. Properties that work for multiple types of buyers, that don't depend entirely on one transportation model or one lifestyle assumption, probably hold up better when markets adjust.

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Working With Professionals Who Understand Market Cycles

Real estate markets are complicated, and reading signals correctly matters. Coldwell Banker Horizon Realty brings decades of experience helping clients navigate shifting market conditions across the Okanagan and beyond. Whether you're looking to buy, sell, or just understand what's happening in your local market, having knowledgeable advisors who see beyond the headlines makes a difference. Connect with our team to discuss your specific situation and goals—we're here to help you make informed decisions in whatever market conditions come next.