Again we ask: Where did all the drug money go?*
From Canada's The Deep Dive, January 20:
A prolonged real estate downturn will drag Canadian home prices lower throughout 2026, according to Bank of Montreal‘s senior economist who accurately predicted the market’s current trajectory years ago.
BMO senior economist Robert Kavcic forecasts a “long and slow grind” toward affordability, warning buyers and sellers against expecting any near-term recovery.
Canada’s national benchmark home price dropped 4% year-over-year in December, extending losses to 18.6% from the early 2022 peak. The Greater Toronto Area showed detached homes selling for 8% less than the previous year in November, with condo prices down 3.8% over the same period.
Kavcic warned investors in 2022 that unwinding the market’s speculative excess would require years, not quarters. His prediction came as real estate speculation surged and interest rates fell below inflation.
Market fundamentals have shifted dramatically since then. Central bank policymakers delivered seven consecutive rate cuts from June 2024 through March 2025, bringing the benchmark rate into neutral territory. Ottawa has curtailed immigration flows. Investor activity has virtually disappeared.
Annual home sales volumes fell 1.9% in 2025, marking the third-weakest year of the past decade, according to BMO’s monthly housing monitor.
“Incomes still need to catch up and that takes time,” Kavcic said.
Regional performance varies sharply. Southern Ontario struggles most severely, particularly in new condo sales where investor absence has dried up activity. Vancouver faces elevated inventories and buyer’s market conditions, with both condo and detached prices down roughly 5% year-over-year.
Markets in Quebec and Atlantic Canada remain tight. Quebec City led national gains with prices jumping 17% annually, while Montreal rose 5.8% and Moncton increased 4.7%.
Calgary has cooled after strong early-2025 performance, with sales down 14.8% from the previous year and prices declining 3.4%.
Developers continue building smaller condo units even as buyers seek larger single-family homes, creating an oversupply that threatens further condo price erosion. Pre-construction buyers who committed to purchases years ago now confront mortgage rates near 4%—more than double the 1.75% they expected. Many cannot afford to close or sell profitably, forcing them to become landlords in a weakening rental market....
....MUCH MORE
*Previously:
August 2025 - Canadian Condo Crash
I wonder where all the drug money went? Canada used to be swimming in the stuff, from the B.C. bud crowd in Vancouver to the Fentanyl cowboys across the plains to Toronto to the old skool Mafias in Ottawa and Montreal. See for example "The Montreal Mafia Murders: Blood, Gore, Cannolis, and Hockey Bags" or at Sky News: "Mafia in Canada: How the ’Ndrangheta built a Toronto empire".
September 2025 - Meanwhile In Canada: "No One Wants to Buy a Condo"
