Not there yet

It was a defining moment.

After telling us their policy rate was being neither raised nor lowered, Bank of Canada’s top brass held a presser. And that’s when Senior Deputy Governor Carolyn Rogers dropped this:

“We need house prices to fall.”

A big deal, for several reasons.

First, we’re in the middle of a war that has jumped energy costs and guarantees inflation is about to go somewhat wild again. To suggest the main asset most Canadian families own – and have stored the bulk of their net worth – will devalue when everything else inflates, is crushing.

Second, the price plop so far has been massive. Some say it’s historic.

Look at Canada’s biggest market, the GTA, nesting grounds for almost seven million little beavers. From the winter of 2022 until now, the average property has lost more than 24% of its value. When you factor in inflation – as modest as it may be – that decline increases to 34%.

Compare that to the previously-worst-OMG housing dump ever in this market, which started in 1989. Over the four years from that peak, prices dropped proportionately less – only 21%. But that wasn’t the bottom. It came a couple of years later at just over 30%. Most importantly, house values did not return to the pre-crash pinnacle until 22 years after it occurred.

This past experience – plus other factors (Trump, $100 oil, war, AI, rising unemployment, household financial stress, Drake) – suggests we may not have yet scraped bottom.

And where it that?

“I would say we’re halfway through,” Daniel Foch, the chief real estate officer at Valery.ca, told a mortgage publication this week. “I would expect prices to stop declining in 2027, and then they may be flat for a long time.”

So here’s the third reason, Rogers’ statement was a shocker. Falling real estate values are not what governments want. The opposite.

Remember Poor Gregor Robertson, Canada’s housing czar? When first appointed, and asked if houses needed to get cheaper, he said, “No”. Then he added, “I think that we need to deliver more supply, make sure the market is stable”. And later he tried to walk everything back by saying the average price of all housing in Canada needs to decline, but not that of individual houses.

Huh?

Roberston has suggested existing home values don’t need to crash to make the country more affordable. Instead, a mess of cheapo pre-fab Carney Homes to be built on federal land will bring the aggregate average spiralling lower.

Of course, such units have yet to exist. And the commercial building sector is in tatters since nobody is buying product. So construction has largely halted.

By the way, as we mentioned here recently, no-price-crash is also the official position of the White House, even as Americans struggle with the same affordability issues as Canadians. In fact, Trump says he does not want “to destroy” the value of real estate for homeowners just so other people can pay less. “I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes”.

Face it, kids. There are more homeowners than renters. They vote more, too.

In any case, the statement by Carolyn Rogers is significant. It’s coming from our central bank, which has vast economic analysis resources, controls the country’s monetary system and is independent from policies set by the existing government.

The CB, in other words, looks at facts. No hopium. No spin.

Those facts include the first two months of 2026 being weaker than the same period in 2025, which turned out to be the worst period in 30 years. And last year we didn’t have $100 oil. There was no war with Iran that was metastasizing through the Middle East. Last winter Trump had not yet tried to seize Greenland, totally alienated America’s NATO allies, called our prime minister ‘Governor Carney’, mused about ‘taking’ Cuba or invaded Venezuela.

The world, compared to now, was boring.

Rogers knows when buyers are scared of life, and stop buying, no central banker or politician on the planet can save asset values.

She said it. Not there yet.

About the picture: “Hope you Dorothy are doing well,” writes Vittorio. “It’s your favourite Italian, by the way.  And my door is alway open when you decide to  travel to Cambridge. Just letting you know that your advice is travelling to the next generation.  My adult kids (27 and 23) are off the payroll and debt free.  They live within their means and save.  Thank you for all you do. Here’s our departed Cody who will forever be in our hearts.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/03/19/not-there-yet-6/