Canadian Home Prices Only Have One Path Forward: BMO

Canadian real estate affordability continued to improve in Q2 2026, but remains far from affordable. The Bank of Canada’s (BoC) Housing Affordability Index logged an 11th straight quarter of improvement, as falling prices, lower rates, and rising incomes drove a historic correction. Unfortunately, housing remains unaffordable for most households, and affordability is still significantly worse than pre-2020. Further improvements are likely needed to revive the market, and one of Canada’s biggest banks sees only one way forward. Bank of Canada Affordability Index The BoC’s housing affordability index measures the share of income needed to own a home. Income is the disposable income of an average household, which skews higher than the median, thus overstating affordability. Housing costs here are defined as mortgage payments and utilities, and the index uses a 6-month rolling average of resale prices. The reading is the share of income required to make those payments, meaning higher numbers indicate housing is less affordable. Canadian Housing Affordability Improves, but Still Not Affordable The Bank of Canada Housing Affordability Index: Share of disposable household income needed fo...