BMO Economist Tells Us Why Canadian Real Estate Investors Are Sitting on the Sidelines

BMO Economist Rob Kavcic joins us on the show:

After years of turbulence in the Canadian housing market, many investors and homebuyers are wondering if 2026 will finally bring relief. According to BMO senior economist Robert Kavcic, the answer is complicated—and not particularly encouraging for those hoping for a quick rebound.

Kavcic is forecasting what he calls a “long and slow grind” toward affordability, with prices expected to decline further before stabilizing. Since early 2022, prices across Canada have already fallen approximately 17% from their peak, but affordability remains stubbornly out of reach for most buyers. In the Greater Toronto Area alone, detached house prices have dropped 8% year-over-year, while condo prices fell 3.8%.

Some buyers are happy about missing out. Rather than rushing to get into the market for fear of being priced out forever, today’s buyers are in no hurry, content to wait as prices continue their slow drift downward. Meanwhile, sellers who held onto their properties hoping for a recovery are beginning to capitulate, with many baby boomers deciding to move ahead with sales despite prices remaining well below 2022 peaks.

The stalemate between buyers and sellers continues, with neither side willing to budge significantly. But as Kavcic notes, “the longer this goes on, the more sellers will give in.” With single-family home inventory remaining tight but condo supply abundant, the market correction is likely to continue unevenly across property types and regions.

Listen to our full conversation with Robert Kavcic as we dig deeper into his 2026 forecast, what it would take to bring investors back, and why he’s particularly concerned about the rental market ahead.