Canadian Real Estate Losses Are Reversing At A Brisk Pace: BMO

Canadian real estate prices surged higher as rates were cut, then plunged as rates climbed. According to a new BMO Capital Markets analysis, markets have retraced a significant portion of their losses despite higher interest rates. In fact, some real estate markets are even hitting new record highs alongside climbing interest rates.

Tracking The Canadian Real Estate Correction And Recovery

The bank’s chart shows the peak-to-trough decline, relative to the current market. Bars on the chart represent the peak-to-trough price drop, which generally occurred from Feb 2022 to Feb 2023. The black dot shows where prices are relative to the start of the correction.


What correction? 🇨🇦’s real estate prices are quickly recovering lost ground after a brief correction, according to BMO. #realestate #canadianrealestate #torontorealestate #vancouver #vancouverrealestate #toronto #vancouver #canada

♬ AIN’T GONNA STOP – Carol Kay

For example, let’s look at Toronto. The city’s bar shows that the benchmark composite HPI fell 17% from peak to trough. Since hitting the bottom (trough), the dot indicates that prices remain 9% below peak. In short, nearly half of the price decline has been reversed.

Canada’s Biggest Real Estate Correction Was In Southern Ontario

Markets with the strongest price growth after rate cuts showed the biggest declines after rates rose. As you may remember, the strongest growth was concentrated in the Greater Toronto exurbs—distant suburbs of the City. These areas are also showing the fastest recovery, even with higher interest rates.

“Markets in Southern Ontario, but outside the GTA, remain in the deepest holes relative to last year’s peak, but they’ve been coming back in recent months,” wrote Robert Kavcic, the senior economist at BMO who prepared the data.  

The most significant declines on the chart are almost exclusively in Southern Ontario. Markets like Kawartha Lakes, Hamilton-Burlington, Kitchener-Waterloo, and London have already retraced nearly half of the price declines as well.

Canadian Real Estate Prices Have Hit New Highs In Some Markets

Most market discussion is focused on higher interest rates pushing prices lower. That’s not the case in all markets, with some recording new all-time highs. Calgary, Saskatoon, and St. Johns have all managed to climb above the market “peak” from last year.

“Calgary is arguably the strongest market in Canada. Prices there continue to run at a double-digit annualized pace, and are now 5% higher than the early-2022 high,” says Kavcic.   

Adding, “In other words, while most of the rest of the country struggled through a correction, Calgary had a brief hiccup and then just powered ahead.” 

These markets highlight the important relationship between home prices and interest rates. The markets hitting new highs are generally more affordable, making them less sensitive to rate hikes. Southern Ontario is highly disconnected from local incomes, resulting in a higher sensitivity to interest rates. This is especially evident after the last increase, which has sent major markets like Toronto back into another downturn.



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  • Dane Fisher 8 months ago

    So there is basically no hope of ever being able to afford a home anywhere in Ontario

  • Aaron 8 months ago

    Entertaining how the article is talking in past tense, as if the correction is over.

  • Apologetic Kill Joy 8 months ago

    Please don’t include TikTok charts. This doesn’t mean, don’t post to tiktok, I really want your viewership to grow.

    If I pause the TikTok then the chart is hidden by recommended videos. The same happens if I let it play and finish. In short, it’s easier for me to see other people’s content than it is for me to see the chart you’d like me to see.

    While boring, I can read the chart as an image. I can’t with a TikTok.

  • Frank 8 months ago

    Looks like we are headed for intergenerational mortgages.

Comments are closed.