Canada's Housing Affordability Problem Isn't Over Yet, BMO Says

10:28 AM EDT, 09/10/2026 (MT Newswires) -- One key reason BMO Capital Markets remains cautious about the Canadian housing outlook is that affordability has yet to return to historical norms. A Bank of Canada measure indicates that housing affordability has improved markedly from its three-decade low reached in late 2023, though it has yet to recover fully, wrote BMO in a note published on Wednesday. The improvement reflects substantial rate cuts in 2024-25, a roughly 20% drop in national home prices from their 2022 peak and income gains, according to the bank. Still, mortgage payments and utilities consume a far larger share of disposable income than the 35.7% long-run median BMO considers a reasonable affordability benchmark. A return to normal would require further income growth, though that will take time, while further rate cuts appear increasingly unlikely given the BoC's hawkish stance, added the bank. "Thus, the burden still seems to be on prices," wrote BMO Chief Economist Douglas Porter in the note.