Bank of Canada Just Warned: 25% House Price Crash If Unemployment Spikes

Bank of Canada Stress Test: Another 25% Downside for Canadian Home Prices If Unemployment Jumps The episode breaks down the Bank of Canada’s 2026 Financial Stability Report and its housing stress test, which shows Canadian home prices could fall another 25% from current levels in a severe shock, after already dropping about 20% from the 2022 peak. The key trigger is jobs: if unemployment rises sharply (from roughly 6.5–7% toward 10%), mortgage arrears could hit multi-decade highs and housing weakness could intensify. The script highlights concentrated stress in Ontario and BC—especially Toronto and Vancouver condos—failed pre-construction closings tied to low appraisals and tighter financing, and the ongoing mortgage renewal wave (about 12% of mortgages renewing in the next 12 months with ~15% payment increases). It also notes widespread amortization extensions, rising small business credit stress, and banks increasing loan-loss provisions. 00:00 BoC Risk Map 01:04 Calm Message vs Numbers 03:35 Why Prices Fell Unevenly 04:35 Condo Pressure Points 05:12 Precon Closing Failures 06:08 Renewal Wave Ahead 07:37 Amortization Extension Valve 08:29 Arrears and Early Signals 09:53 Unemployment Is the Trigger 11:20 Small Business Spillover 12:14 Banks Provisioning Up 13:13 Feedback Loop Scenario 14:06 Advice for Buyers 15:10 Reality Check for Sellers 16:02 Investor Leverage Warning 17:00 Key Takeaways and Watchlist 19:05 Final Thoughts #canada #canadarealestate #canadianrealestate #torontorealestate #canadanews #canadaeconomy