Canadian real estate remains out of reach for young adults, but the show must go on. That’s the takeaway from a new housing report from National Bank of Canada. Slow home sales have led to a backlog of developer inventory, but billions in public bailouts are being used to support prices. National Bank urges policymakers to increase their immigration targets and reintroduce foreign buyers to help developers reduce inventory.
Canadian Real Estate In A Slump Despite Billions In Bailouts
The Great Canadian Real Estate Slump isn’t exactly news, but not everyone may be aware of how slow it’s been. Over 1 in 4 (28%) newly completed homes remain unsold, charting new territory for excess supply. “The inventory of completed and unsold housing units across all census metropolitan areas stands at 20,700 units, its highest level since records began in 1990,” warns the bank.
Existing homes aren’t doing much better. Seasonally adjusted sales saw a monthly drop of 2.3% in September, sliding 13% below the 10-year average. While Canadian home prices are now in the biggest correction on record, the almost 5-year slump only rolled back 13 months of price gains. That’s with taxpayer-backed bailouts.
“This demonstrates that the market is so weak that it requires public support,” writes National Bank.
Policymakers aren’t dabbling in support either—they’re fully immersed in the practice. The bank cites Ontario’s $1.3 billion bailout to help investors buy 2,200 unsold Toronto condos. They also cite Ottawa and British Columbia’s $1.45 billion program for roughly the same number of condos. These programs are massive, but even taxpayer-funded bulk buying isn’t enough to clear the backlog.
The bank urges policymakers to drum up more demand. Not from the young adults struggling with shelter costs. They can’t afford to buy a home. They’re calling on Ottawa to look beyond its borders to support prices. Seriously.
Big Six Bank Calls For Higher Immigration To Improve Demand
Canadian real estate prices surged from 2020 and finally peaked in March 2022. That occurred during the pandemic’s population slump, when population growth plummeted to near historic lows. Canada ramped up immigration to unprecedented levels as the slump kicked off. Despite a timing mismatch, reduced immigration is often cited as extending the downturn. The narrative was reinforced by StatCan’s population estimates that revealed a historic contraction. However, that contraction also didn’t happen.
The agency’s recent revisions show the 0.5% y/y decline reported at the start of 2026 was actually 0.5% growth. Ottawa’s plan to reduce non-permanent residents (NPR) to 5% of the population by 2027 is also unlikely. Not only did policymakers delay the target by a year, but NPRs currently represent 6.7% of the population. Canada needs to lose roughly 750,000 NPRs by the end of next year to make those numbers work. Still, the Big Six Bank is concerned.
Reducing NPRs to 5% of the total population will slow total growth to 0.2% in 2027 and 0.1% in 2028, notes the bank. They warn that sticking to the target will mean more downward pressure on housing. “In that context, we believe Ottawa should recalibrate its immigration policy through a targeted and gradual increase in immigration levels,” says National Bank.
Canadians Can’t Afford Homes? Sell Them To Foreign Investors
Canada’s foreign homebuyer restrictions are set to expire in a few months. “The ban on foreign home purchases, which expires on January 1, 2027, should not be extended but rather replaced by a more flexible policy,” explains National Bank.
Whether Canada will renew the moratorium is unclear, but policymakers aren’t fond of the measures. They began to quietly ease foreign buyer restrictions just 86 days after boasting of passing the ban. Canada has since elected Prime Minister Mark Carney, and while he hasn’t addressed the ban directly, the bank notes he recently laid the groundwork for a “controlled increase” in the population.
One of his key fundraisers in BC has been a little more vocal about foreign capital returning to housing. Shortly after PM Carney was elected, Vancouver’s “condo king” said he was working with the PM to drum up foreign capital for rentals.
National Bank sees foreign buyers as one of the only ways developers can sell the homes they built. “We believe it should not be renewed in its current form and that a more flexible model—such as Australia’s, which notably allows foreign buyers to purchase new homes—would help reduce the inventory of unsold housing,” argues the bank.
The bank’s take seems tone-deaf, but the implications are more disturbing. RBC recently found the average first-time buyer plans to buy at 41, 12 years later than current owners did. Separately, they found parents are increasingly helping their adult kids pay bills—a trend most parents attribute to a soaring cost of living rather than poor money management.
Canada’s young adults have been locked out of the housing market. For years they were told that more supply would close the gap, and building more would finally bring prices down. After taxpayers footed the bill to accelerate construction, the narrative abruptly shifted: prices can’t fall further because developers can’t make the math work. Since young adults can’t afford these prices, we suddenly need more temporary residents to support attractive rents that developers can pitch to foreign landlords.
Just our regular reminder that Canada is a Ponzi scheme. Good thing Boomers saved us from the American invasion, which apparently consisted of a rambling fool renaming a lake that the rest of the world ignored.
Canada needs to open up immigration channels and reintroduce foreign buyers to help developers sell their inventory and clear up the backlog. Tough luck for a generation that will receive the largest inheritance in history from Boomers.
While your point about foreign capital clearing backlogs is supported by the report, dismissing the “largest inheritance” coming to young adults ignores the fundamental fact that rising costs mean they are already unable to purchase homes without significant parental help. If we simply import more buyers while prices continue to be proped up by bailouts, we might solve a short-term problem but we won’t solve the long-term social issue.
This feels like an admission that our housing model is broken rather than a simple supply fix. With people delaying buying until their late 40s and parents funding their kids’ lives, we need a strategy that actually helps Canadians, not just developers.
The inventory numbers are ridiculous, and the bailouts only create dependency rather than solving the root problem. They have to be kidding that they can’t let prices roll back a number that rose in a matter of weeks DURING A PANDEMIC.
You are correct that billions in public bailouts have masked the market’s reality rather than solving its root causes, and it would be absurd to expect prices to remain fixed after peaking within weeks of the pandemic. While we disagree that immigration alone is the fix, the data on weak sales and high inventory shows why current policies aren’t working for young buyers or developers alike.
I don’t buy into the narrative that foreign buyers are saviors. If local people can’t afford to buy, importing more demand feels like passing the buck on a systemic issue.
Leave it to Carney the central banker to engineer bank bailouts by developer proxy. As for immigration Europe is burning after 50 million migrants so you may want to rethink that one.