Canadian real estate’s downturn shows no signs of reversing, according to a Big Six bank. BMO Capital Markets is warning investors that home prices haven’t moved in nearly a decade, once adjusted for inflation. Now in the middle of the largest correction since the 90s, the bank sees inflation accelerating in the coming months, eroding real prices further.
Canadian Real Estate Demand Weak As Spring Looms
Canadian real estate demand has been weak, and inventory has been unusually robust. The sales-to-new-listings ratio (SNLR)—a gauge of demand relative to supply—hit its lowest February level in at least a decade. Winter typically brings notoriously low volume, which many cite to dismiss the weakness heading into spring.
BMO acknowledges spring can impact the outlook, but it isn’t entirely convinced. “Bigger picture, the market continues its long and slow downturn, with conditions still varying by region and market segment. We await the spring market for a better indication of whether conditions will tighten up in 2026,” explains BMO Senior Economist Robert Kavcic.
Canadian Real Estate Prices Haven’t Budged 9 Years In Real Terms
Source: BMO Capital Markets; CREA.
The price of a typical home across Canada is falling almost as fast as it climbed. Seasonally adjusted values jumped 56.7% (+$299,600) between the start of the low-rate frenzy in April 2020 and the peak of $827,600 in February 2022. After the first rate hike of this cycle, prices have plunged 20.1% (-$166,500) to $661,100 in February 2026, wiping out gains since early 2021. The correction has rolled prices back to where they were five years ago.
That’s without factoring in the damage inflicted by inflation, the bank reminds us. “In inflation-adjusted terms, that decline is nearly 30%. And, in those terms, Canadian homeowners have now seen 9 years of no real price appreciation,” explains Kavcic.
While a decade of stagnation sounds like a long time, it isn’t in the context of a Canadian housing correction. For context, it took roughly 22 years for Greater Toronto real estate prices to reclaim their inflation-adjusted value after the 1990s bubble collapse.
Canadian Real Estate Prices To See More Downward Pressure
A 90s-style real estate correction may be closer than most industry experts are willing to admit. That’s the last time Canada has seen anything even close to this magnitude. Kavcic notes, “You have to go back to the bad 1990s cycle to find something similar.”
In 2021, the economist warned that the market had begun to “crest,” cautioning investors to prepare for the possibility of negative equity if they purchased at that point. After nailing that call, he warned that buying activity won’t return until 2029, as Millennials have reached their demographic peak, limiting the fuel low rates will provide.
His outlook today isn’t exactly encouraging for those hoping for a quick return. “And, with inflation poised to pick up in the months ahead, while the market still languishes, we don’t expect this downward momentum in real home prices to turn around soon…,” warns Kavcic.
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