BMO chief economist says Canadian home prices have cumulatively fallen more than 20.5% since early 2022, nearing the scale of the U.S. decline in 2008
BMO Chief Economist Doug Porter said that Canadian home prices have continued to decline since early 2022, with the cumulative drop now exceeding 20.5%. That magnitude is close to the roughly 26% cumulative five-year decline in the United States from 2007 to 2012.
In his related analysis, Porter pointed out that the U.S. home price decline at the time was closely tied to the global financial crisis and the ensuing Great Recession. By contrast, since Canadian home prices began to fall, average GDP growth has been close to 2%. He explained that the rise in Canadian home prices to their peak was more abrupt, so there were fewer buyers stuck at the top; this adjustment has mainly been concentrated in Ontario and British Columbia, while roughly half of the other regions have not seen a comparable decline; and holders of Canadian mortgage debt are relatively stronger in quality, partly thanks to stress test rules.
The above comparison is based on BMO economists' side-by-side analysis of the cumulative decline in Canadian national home prices and historical declines in the United States. Porter's remarks describe the scale of the price adjustment and explain why Canada has not experienced a severe recession, rather than predict future trends.
Original source:
Title: Barlow’s Research Roundup: How Canada dodged recession after record housing price correction Publisher: Scott Barlow / The Globe and Mail Publication date: 2026-10-09 URL: https://www.theglobeandmail.com/investing/markets/inside-the-market/article-barlows-research-roundup-how-canada-dodged-recession-after-record/ Source nature: financial media quoting bank economist analysis Verification status: full text read in this instance, verification date 2026-11-01 Supporting content: BMO Chief Economist Doug Porter said Canadian home prices have cumulatively fallen more than 20.5% since early 2022, close to the roughly 26% five-year decline in the United States from 2007 to 2012; and explained why Canada did not experience an equally severe recession
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Doug Porter is BMO Capital Markets' chief economist and has long tracked the Canadian housing market. In this statement, he compares Canada's cumulative national home price decline since early 2022, of more than 20.5%, with the roughly 26% decline in the United States from 2007 to 2012. The U.S. home price decline during that period occurred against the backdrop of the subprime crisis, accompanied by high leverage, large-scale foreclosures and credit contraction, and coincided with the global financial crisis and the Great Recession. Canada's adjustment, by contrast, occurred after a rapid rise in interest rates, and the national data mask regional divergence: Ontario and British Columbia saw larger declines, while other regions remained relatively stable.
Canada introduced prudential measures such as mortgage stress tests in this cycle, requiring borrowers to prove they could still repay at higher interest rates. Porter cites this as one reason Canadian mortgage holders are relatively stronger in quality and why the adjustment did not trigger a systemic credit crisis. At the same time, the process by which Canadian home prices rose to their peak during the pandemic-era low-rate environment was relatively short, meaning the share of buyers who purchased at the highest point was relatively limited, which differs from the longer buildup of a bubble in the United States.
It should be distinguished that the cumulative decline in national average or benchmark prices does not mean that all regions and all property types experienced the same magnitude of adjustment, nor does it automatically translate into a banking-system shock similar to that in the United States in 2008. The capital adequacy of the Canadian banking system, its regulatory framework and the structure of mortgage securitization differ from those in the United States at the time. The actual economic impact still depends on subsequent sales volumes, employment, the path of interest rates and further regional divergence.
ABAB News · Law of cognition
The cumulative decline in national home prices is a weighted result of regional and property-type data and cannot be directly equated with the magnitude of adjustment in every market.
The relationship between price declines and recession depends on credit structure, borrower quality and regulatory differences, not on how close the decline figures are by themselves.