BMO Smarter Investing 54 - Can the Canadian Housing Market Shake off Its Slump?
Mar 5, 2026
Robert Kavcic, a Senior Economist at BMO who analyzes macro and housing trends, breaks down Canada’s split 2025 market and what 2026 may bring. He discusses regional price divergence, why affordability and supply blunt a quick rebound, the condo glut and investor pain in the GTA, and how demographics and slow real estate cycles could prolong the correction.
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2026 Looks Like 2025 For Housing
- Canada’s 2026 housing outlook largely repeats 2025 with uneven regional performance and low sales volumes.
- Southern BC and Southwestern Ontario remain under correction while Prairies, Quebec and Atlantic Canada see continued price growth.
Affordability, Not Spring Optimism, Will Drive Recovery
- Affordability remains the binding constraint because prices outran incomes at the 2022 peak and mortgage rates likely stay near current levels.
- With Bank of Canada on hold, mortgage costs near 3.75–4% limit quick improvement, leaving income growth to fix affordability slowly.
Demographics And Immigration Cut Demand
- Two demographic shocks are reducing housing demand: the millennial wave has passed its peak home‑formation years and tightened immigration policy cut non‑permanent resident inflows.
- Immigration caps (targeting ~5% non‑permanent share) imply two to three years of near‑zero population growth, cooling rental demand.