Canadian Real Estate Nears A Bottom? RBC Calls It For An 8th Time In 4 Years

Huzzah! Have you heard the good news? A Big Six bank has declared the bottom of Canada’s real estate markets. RBC announced the bottom of the market in its August update, turning the industry into messengers of the prophet on social media. It’s unclear why it’s caught steam this time around, as the bank first called a bottom just a few months after the peak. The bank continued to make the call at least twice annually for the past 4 years. While we aren’t saying the 8th time isn’t a charm, it’s not exactly clear they’re grounding these calls in reality. 

Canada’s Largest Bank Calls The Bottom of The Market—Again

Earlier this week, RBC declared a cyclical turning point for the market. The bank’s vision was inspired by a seasonally adjusted monthly rise in home sales. “It also increasingly appears that home values have already hit their cyclical bottom,” wrote the bank.

“The national aggregate MLS Home Price Index increased for a second time month-over-month. Such back-to-back advances haven’t been seen since early 2024,” they explain. 

It’s worth mentioning here that unadjusted home prices slipped for two months. At the same time, unadjusted sales were lower year-over-year. For those new around here, seasonal adjustments seek to eliminate predictable fluctuations. Professionals don’t use them for asset prices, as it violates the efficient market theory. This fundamental theory states that prices reflect all known data. If prices fell 2% every October, arbitrageurs would try to capture the profit. The price of assets would reflect this opportunity, resulting in nothing to eliminate. 

We digress. The point stands: RBC and Canada’s real estate industry do this, and when viewed this way the bottom is in. Though the bank is hedging its call. “The market’s recent winning streak is encouraging, but the reality is that it’s still generally soft. The rate of improvement is incremental… This isn’t a fast track to recovery to say the least.,” explained RBC economists. To reiterate, they see the market at a bottom, but the recovery will be slow. 

A Rolling Bottom: RBC Sees More Bottoms Than Sir Mix-A-Lot

Most people are unaware of just how often the bank has declared a market bottom. It happens so often that it may be a nervous tic or a form of OCD that requires professional help. This addiction began just a few short months after the initial market peak. Yup, before interest rates had even reached their peak, the bank announced it would be over soon. 

“This is consistent with our view that a cyclical bottom is approaching—likely in early-2023,” wrote the bank in December 2022. Fewer than 9 months after prices peaked, they anticipated only a year of declines. They called one of the fastest corrections in history, not factoring in rates or credit. Feels a little disingenuous, but that doesn’t matter if they’re right. They weren’t. 

2023

When early 2023 rolled in, the bank pushed its timeline out. “The Canadian housing market correction has yet to run its course but it’s gradually letting up. We think activity will hit bottom sometime this spring,” wrote the bank in its March 2023 report. 

Interest rates had yet to peak, and the impact of rate hikes had yet to work its way through the market. Bank of Canada research shows it takes between 18 and 24 months for monetary policy to be fully felt. But fundamentals be damned, this is economics—not finance. 

Spring came, but the bank didn’t acknowledge that conditions hadn’t improved. It was busy warning of a supply shortage crisis that required a “significant boost in stock.”

As the leaves changed colour, RBC acknowledged a Spring 2023 recovery was unlikely. It warned that “the housing market downturn spread further.” They expected “sluggish activity [would] linger into 2024,” the recovery delayed until Q3. 

“We see prices firming up after activity has turned and demand-supply conditions have tightened sufficiently—possibly sometime in the third quarter [of 2024],” wrote the bank.

2024

Only 4 months later, the bank had already felt vindicated by its call. In February 2024, it declared “early signs of a housing market upturn emerge across Canada.” It moved its call of a bottom up by months. “We expect prices will reach their bottom this spring and gradually recover over the second half of 2024,” wrote the bank. 

After two months into the second half, RBC didn’t see the activity it anticipated. It pushed its forecast back, noting a “slower housing market recovery with a potential acceleration towards the end of 2024 and into next year.”  

By December, it must have forgotten what the fall looked like. The bank declared, “Lower rates stoked Canada’s housing market momentum this fall.”

“We expect the upswing to continue into 2025, as interest rates fall further,” added the bank. Spoiler: the upswing did not continue into 2025.  

2025

The bank was undeterred when 2025 rolled around. This was the year all of those rate cuts would finally boost the market. “We believe further interest rate cuts by the Bank of Canada will stimulate homebuyer demand in 2025—keeping the rally going in most markets,” explained the bank in January 2025. 

Those high winter hopes turned into a summer depression by mid-year. “Our January outlook anticipated that interest rate cuts would spur activity and push prices slightly higher in 2025. However, market conditions have been weaker than expected,” said RBC in August 2025. At this point, most would pull back and acknowledge that this market is harder to call than previously assumed. 

Not RBC. The bank showed the kind of resilience typically reserved for a naive puppy. It called a bottom for a third year in a row, declaring a “…rebound in home resales next year.” They saw improved affordability and pent-up demand driving a recovery in “early 2026.” Sure, why not?  

2026 

Tragically, early 2026 didn’t cooperate with that call. In its March 2026 update, the bank warned that Vancouver—a market it cited leading the recovery—made its steepest annual drop since 2023. 

As you know, that didn’t matter by the time this month rolled around. A streak of seasonally adjusted monthly gains was enough to inspire its bottom call. That brings us to the August 2026 call that the real estate industry has been excited about. After 4 years of calling a bottom, maybe this is it? Let’s see what they’re working with. 

Bottom of The Market? Most Provinces Have Home Prices Near Highs 

The bank’s calling the bottom of the market, but it’s not exactly clear that RBC understands where the market is. The bank often attributes a lack of buyers to steep prices, but that hasn’t changed. Even if the composite data suggests it did, a regional breakdown reveals that’s not quite the case. 

CREA’s national benchmark isn’t quite what it seems. Since peaking in March 2022, the price of a typical home has dropped 21.3% (-$179.3k), with Ontario 25.5% (-$257.3k) lower and B.C. down 15.5% (-$161.7k). Those are the only two provinces in the index that show any material correction for prices. The rest of Canada’s provinces show prices either at an all-time high or just off. 

The bank frequently attributes the delayed recovery to a lack of affordability. Most provinces are within 3 points of record highs, showing that the issue remains. Other provinces may be cheaper than Ontario and B.C., but they remain out of reach for local incomes. Another Big Six bank recently shared data showing that no market is affordable in Canada, requiring double the median household income to buy a home. If the bottom is in while most of Canada couldn’t afford these prices, who drives this activity? 

Taxpayers are footing the bill for multi-billion-dollar loans to help institutions buy homes. It will boost demand temporarily, but it isn’t a sustainable market solution. In fact, it’s more likely to extend the market inefficiencies and worsen the problems. Ditto with cheaper financing and extending leverage, which Bank of Canada staff researchers recently warned makes affordability worse. 

Forecasting is hard, and we appreciate that. It’s even harder to forecast following a wave of exuberance, since irrational markets are… well, irrational. A call that doesn’t materialize isn’t necessarily a bad one, and most people in finance would agree. Especially those who have training in forecasting and understand what a forecast actually is. 

Forecasting is an art, not a science. It’s an educated guess based on a snapshot of time, using inputs from that moment. There are a lot of moving parts, so when those inputs change, the outlook needs to be updated to reflect the changes. That’s the problem with RBC’s forecasts in a nutshell here. The bank didn’t use credit or interest rates, nor did it try to measure demand that was pulled forward. It didn’t factor in liquidity, and what happens when more than half a country can’t afford to actually buy at this level. 

If we didn’t know any better, it would appear that Canada’s largest bank is sharing wishful thinking as a forecast. Whatever their methodology is, it hasn’t worked for the past 4 years, but maybe this time is different.