🏦 Canada’s Economic Reality: A “Per-Capita Recession”
CIBC’s deputy chief economist Benjamin Tal believes Canada’s economy is in a recession — even if it doesn’t yet meet the technical definition.
Speaking at the Mortgage Professionals Canada national conference in Ottawa, Tal said that while GDP might not show two straight quarters of decline, the downturn is being felt across households.
“If it’s not officially a recession, it’s definitely a per-person recession — especially in Ontario and BC,” he explained.
According to Tal, the current slowdown represents “the biggest test for the mortgage industry since the 1990s.”
📉 Housing Market: “Frozen” in Major Cities
Tal painted a grim picture of Canada’s housing market, particularly in Toronto and Vancouver.
He described the situation as a “frozen market” — where:
- Homes are too expensive to buy, but
- Not expensive enough to justify new construction.
He broke it down further:
- 🏘️ Low-rise homes (detached and townhouses) are holding steady but not thriving.
- 🏢 High-rise condos are deep in recession territory.
- 🏗️ Purpose-built rentals are slowly gaining traction.
Weak consumer spending and rising unemployment are also weighing on the broader economy.
💰 Calls for Interest Rate Cuts and Tax Relief
Tal urged policymakers to act quickly to revive confidence and affordability.
He recommended:
- A Bank of Canada rate cut to ease borrowing costs.
- Removing GST and HST on home purchases to help all buyers, not just first-timers.
Other major banks, including RBC and Scotiabank, also expect more rate cuts ahead.
Tal warned of potential “payment shock” for homeowners renewing mortgages in 2026, noting that about 1 in 10 borrowers could see payments jump 50% or more if rates stay high. ⚠️
🧳 Immigration Data and Market Impact
Tal also pointed out a gap in Canada’s population tracking.
He believes the number of non-permanent residents is being undercounted, meaning real housing demand may be higher than official reports show.
“People think Canada has 41 million residents. The truth is closer to 42 million — one million are simply not being counted,” Tal said.
Statistics Canada pegged the population at 41.6 million in mid-2025, marking the slowest second-quarter growth since 1946 (excluding pandemic years).
This slowdown reflects tighter immigration policies introduced in 2024, which sharply reduced the number of temporary residents.
🔮 What’s Next for the Housing Market?
Looking ahead, Tal expects continued weakness for roughly two years, but predicts a rebound if governments move quickly on tax and development-charge reforms.
“Your industry will start improving by late 2026 into 2027,” he told the audience. “Not booming, but stable.”
🏠 The Bottom Line
Canada’s housing and mortgage sectors are under pressure — but with the right policy moves, recovery is possible.
Lower rates, fairer taxes, and smarter immigration planning could help unfreeze the market and restore balance over the next few years. 🌤️
At Go Approval, we keep a close eye on Canada’s housing and economic trends so you don’t have to. Whether rates rise, fall, or stay steady, our team is here to help you make informed mortgage decisions that align with your goals.
👉 Stay connected for more insights, expert updates, and strategies to navigate every market cycle with confidence.