There are signs of hope in Canada’s housing market. But is it time to use the ‘b-word’?

Whether economists ultimately conclude that Canada’s housing market bottomed in 2026 may not be known for months or even years. Photo by Peter Power/Postmedia

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It’s been more than four years since Canada’s housing boom came to an abrupt end in 2022, and throughout that period the perennial question hanging over the market has been, how much farther will it fall?

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Now, a handful of economists are cautiously floating the ‘b’ word, positing that we may finally be nearing the bottom.

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They’re careful not to signal a recovery. They repeatedly caution against expecting one. Instead, they suggest the market’s long, drawn out correction may simply be reaching its end.

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“Canada’s housing market is stabilizing — dare we say bottoming,” BMO Capital Markets senior economist Robert Kavcic in a July 17 note to clients, titled Bottom Fishing in Canadian Housing. He said that lower borrowing costs, rising incomes and more balanced market conditions have helped prices find a floor.

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Kavcic believes the housing cycle has already worked through several of the factors driving the downturn: excessive speculation during the pandemic boom, aggressive interest rate hikes by the Bank of Canada, a multi-year decline in prices, and more recently, a sharp pull-back in residential construction as pre-sales disappeared and projects were shelved.

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The next phase, he argues, is one where lower prices and reduced supply gradually begin to rebalance the market.

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His forecast comes with caveats though.

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“To be sure, there are pockets where weakness will continue well into 2027 (see the Toronto condo market), and we don’t believe that conditions will dictate a sharp recovery,” he said.

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Kavcic isn’t alone.

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Ben Rabidoux, founder and president of Edge Realty Analytics, says housing market bottoms rarely present as a dramatic turning point. Instead, they tend to emerge slowly as new supply dries up while demand gradually rebuilds.

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“When you look at past housing cycles, you usually find a bottom when new supply coming into the market is constrained, and sales are at deeply distressed levels,” Rabidoux said.

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Recent housing data suggest those conditions are beginning to emerge.

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National home sales have risen seven per cent from their March low. New listings in Ontario fell 5.5 per cent in June from a year earlier to 43,442 properties. Active listings, also in Ontario, declined 5.1 per cent to 75,759 properties. Months of inventory — a measure of how long it will take to sell a property currently on the market at the current pace of sales — eased to 4.2 from 4.7 months year over year, according to the Canadian Real Estate Association (CREA).

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In Rabidoux’s view, Ontario’s real estate market is starting to show many of the hallmarks of a bottom.

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“Right now in Ontario, you’ve got no new supply coming. I mean, the chart on single-family completions is wild. We’re running at the lowest levels on record from CMHC going back to 1990, and at the same time, you’ve got home sales that, on per capita terms, are as low as they’ve been since the ‘90s,” he said.