BMO Warns Canadian Housing Downturn Could Deepen Further
Canadian real estate prices have been declining since early 2022, and BMO analysts suggest the downturn could continue, drawing comparisons to housing corrections seen in the 1990s and the U.S. housing crash of 2007. The bank notes that the current cycle reflects a significant shift in market conditions following a period of rapid price growth fueled by strong demand, low borrowing costs, and market psychology. Analysts believe the adjustment process could take years as housing affordability and investment dynamics realign with economic fundamentals. 
BMO indicates that the conditions that supported previous price surges are unlikely to be repeated, including ultra-low interest rates, pandemic-driven migration trends, and elevated levels of liquidity. The analysis suggests the housing market is undergoing a prolonged correction rather than a short-term fluctuation, with affordability pressures and changing buyer sentiment influencing demand. According to the bank, recovery timelines may extend over several years as market conditions gradually stabilize.
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