06:58 AM EDT, 06/27/2025 (MT Newswires) -- The Canada Mortgage and Housing Corporation (CMHC) is now targeting pre-pandemic levels of affordability as a baseline objective, which is a fairer marker than the early-2000s

previously used, said Bank of Montreal (BMO).

The early-2000s saw generationally-cheap housing at the tail end of a near-decade-long bear market, and before imposed single-detached supply constraints -- an odd benchmark to say the least, noted the bank.

As to what has really changed to destroy affordability in such short order since 2019, BMO pointed out the common refrain is a lack of supply, but completions have leveled up by almost 20% from 2019.

Granted, not in the segments that Canadian families actually need, stated the bank.

Meantime, demand exploded on the back of:

--1. Deeply negative real interest rates, which set valuations out of whack with income fundamentals.

-- 2. A surge in population growth to 1.3 million people/year at one point.

Both demand-side factors have now been addressed, and the path back to pre-pandemic affordability is underway, according to BMO. Canada can get there with stable home prices, income growth, a modest further step down in borrowing costs and sturdy completions.