Economist tells mortgage professionals the downturn marks 'the biggest test to your industry since the 1990s'
CIBC deputy chief economist Benjamin Tal has said Canada's economy is essentially in recession, even if it has not yet met the technical definition of one.
Tal told an audience at the Mortgage Professionals Canada (MPC) national conference in Ottawa that the housing market faces a prolonged period of weakness, and said urgent policy action could be needed to improve the national housing outlook.
“We are in a recession. If it’s not a formal recession, it’s a per capita recession for sure—especially if you live in Ontario and BC,” he said.
“What’s happening now is the biggest test to your industry since the 1990s. And it was very bad back then.”
Tal described the current economic climate as a “per capita recession,” pointing to weak consumer spending, rising unemployment, and a housing market that had “frozen” in major cities.
“The condo market in Canada, especially in Ontario and Vancouver, is in a recession,” he said.
“The low-rise segment is doing okay. Not great, okay. The high-rise condo market is in a recession. Purpose-built is starting to move.
“The way to describe the housing market in those areas is the following: the market is frozen. Houses are too expensive to buy and not expensive enough to build.”
Calls for rate cuts and tax relief
He urged policymakers to act quickly, calling for a cut to the Bank of Canada’s key interest rate and the removal of GST and HST for all homebuyers to stimulate demand.
“We need to cut interest rates now,” Tal said.
“They are going to meet [in October]. I believe they will cut... and if they don’t cut, they will cut after that because they have to.”
Royal Bank of Canada (RBC) and Scotiabank have also recently projected that the BoC will cut rates again.
Tal also flagged the risk of mortgage payment shocks for Canadians renewing in 2026 if rates remained high, estimating that 10% of those homeowners would see an increase of 50% or over in their monthly mortgage payments.
Immigration and market outlook
He warned that the current immigration policy had led to undercounting of non-permanent residents, which in turn distorted housing demand forecasts.
“We [have] more people in the country than you think. People say we are 41 million. No, we are 42 million in the country. But we are not counting one million,” Tal said.
Statistics Canada’s official estimate for Canada’s population as of Q2 2025 was about 41.6 million.
This is the slowest second-quarter growth since 1946, outside of the pandemic.
The slowdown was driven by a sharp reduction in non-permanent residents, a direct result of tighter federal immigration policies introduced last year.
Looking ahead, Tal predicted that the market would remain weak for the next two years before recovering, with a “significant boost” possible if the government moved quickly on tax and development charge reforms.
“Your business will be okay in the second half of 2026–2027,” he said. “Not great, but okay.”
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