Canada faces a multi‑year housing correction, with prices about 20% below peak and likely to move sideways as stretched valuations, flat interest rates and moderating demographics work through the system. BMO’s Robert Kavcic joined GRI’s Macroeconomic Policy Webinar Series 2026 to offer his insights on Canadian housing markets and their likely path in 2026 and beyond.  

Kavcic reviewed macroeconomic factors impacting the housing market, noting that while core inflation has settled near 2.5%, previously elevated price levels keep expectations sticky, limiting room for further monetary policy easing beyond the Bank of Canada’s current 2.25% policy rate through 2026. Population‑growth is also constrained by changes to immigration quotas, reducing housing demand overall, contributing to lower home prices as well as rents. When asked about previous construction targets set by government, he said they are highly unlikely to be met. 

For financial institutions, the key risks sit in investor‑heavy and rental segments, regional divergences, and a slow‑growth environment rather than a systemic housing bust.