March 20, 2026 | Why Canada’s Housing Market Isn’t Done Correcting

Canada has entered a new demographic and economic phase—one defined not by the rapid population expansion of the post‑pandemic years, but by a sharp and deliberate cooling. Statistics Canada’s latest estimates show the country’s population fell by more than 100,000 people in 2025, the first annual decline since records began in the 1940s. The drop was driven almost entirely by a steep contraction in the number of temporary residents, following federal measures introduced in 2024 and 2025 to rein in the size of this cohort.

Between October 1, 2025, and January 1, 2026, the population shrank by 103,504 people—an abrupt reversal from the extraordinary growth of the previous two years. The number of non‑permanent residents alone fell by 171,296 in the quarter, bringing their share of the population down to 6.4 per cent, with Ottawa targeting 5 per cent by 2027. As BMO economist Robert Kavcic put it, Canada is now “fully in an era of normalization,” with population growth expected to hover around zero for the next two years.

This demographic shift is already rippling through the housing market. The Teranet–National Bank House Price Index recorded its third consecutive monthly decline in February, falling 0.5 per cent on a seasonally adjusted basis. Weakness was broad‑based: eight of the eleven major metropolitan areas saw prices fall, including Toronto, Montreal, Vancouver, and Ottawa‑Gatineau. Even outside the composite index, many smaller markets posted sharp monthly drops—Barrie, Brantford, and Saint John among them.

Source: Teranet-National Bank House Price Index

On a year‑over‑year basis, the national composite index is down 4.4 per cent, with the deepest declines concentrated in Ontario’s mid‑sized cities. Hamilton, Toronto, and Vancouver all posted sizable annual losses. While a handful of markets—most notably Quebec City and Edmonton—continue to show resilience, the broader trend is unmistakable: the housing correction remains intact, and in many regions is accelerating.

Layered on top of this is a growing strain in the subprime credit market, highlighted this week by Goeasy Ltd.’s stunning announcement of surging loan losses, a suspended dividend, and the withdrawal of its financial guidance. The lender, long a beneficiary of the low‑rate credit boom, now faces a $178‑million charge for bad loans and a $55‑million writedown in interest and fees. Its shares fell 57 per cent on the news.

Goeasy’s customer base—lower‑income households and newcomers with limited financial buffers—is precisely the segment most exposed to the current economic slowdown. With an average borrower income of $62,000 and a median credit score of 590, this group is highly sensitive to rising delinquencies, job market softening, and the broader affordability squeeze. The company’s troubles underscore the widening divide in Canada’s K‑shaped economy, where higher‑income households remain relatively insulated while lower‑income borrowers face mounting stress.

Taken together, these developments point to a housing market that is likely to remain under pressure. Slowing population growth reduces demand at the margin, while tightening credit conditions—especially for subprime borrowers—limit the ability of lower‑income households to participate in the market. With lenders like Goeasy now flashing warning signs, real estate’s downward trajectory seems poised to continue unless the federal government steps in with measures to ease credit strains at the lower end of the market.

Fraser Betkowski

Hilliard MacBeth March 20th, 2026

Posted In: Hilliard's Weekend Notebook

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