CIBC Says Your Home Is Worth Less Than You Think — And That's About to Hit Your HELOC, Your Spending, and the Economy

Sales, Prices, And Expectations Are Moving In Different Directions

For homeowners, the most practical starting point is acknowledging that “my place is probably worth…” can lag reality during a correction. In January, a Jan. 19, 2026 First National Financial quarterly report summarized Canadian Real Estate Association data showing December home resales were down month-over-month, the MLS Home Price Index slipped on the month, and the index was down year-over-year.

That mix matters because it can create a disconnect between what owners remember (peak headlines, neighbour’s sale from two years ago) and what lenders, appraisers, and buyers price today. Even small month-to-month declines compound into a different “base” when renewal time arrives or when you’re trying to unlock equity for a renovation.

The other reason expectations go stale is that forecasts themselves have been unusually fragile. An April 2025 Canadian Real Estate Association forecast update carried by GlobeNewswire described tariff and economic uncertainty pushing buyers to the sidelines and forcing one of CREA’s largest forecast revisions between quarterly updates since the financial crisis era.

You don’t need to treat any single forecast as a crystal ball to get the homeowner takeaway: when the market narrative shifts from “rate cuts will fix it” to “uncertainty is structural,” homeowners are the ones who feel it through tighter credit, longer decision timelines, and a more cautious spending mood.

The Quiet Math That Can Reduce Your Options At The Margin

The most under-discussed homeowner risk in a correction is that your “available equity” can shrink faster than you expect, because lenders care about loan-to-value (LTV). In the Feb. 18, 2026 CIBC Economics housing correction report the authors note the average LTV in Canada’s uninsured mortgage portfolio sits around 55%, while warning that borrowing against home equity is “becoming an issue at the margin” as prices fall, especially in Ontario and British Columbia where prices have dropped below 2021 levels.

Here’s the high-level mechanism without getting into lender-by-lender rules:

• LTV is simply the loan amount divided by the home’s value.
• When your home value falls (or stops rising), the same mortgage balance becomes a larger percentage of the value.
• A higher LTV usually means less room to add or extend credit against the home, particularly for owners who bought recently with thinner equity buffers.

That’s why a correction can “hit your HELOC” even if you haven’t drawn on it yet. Your home might still be a strong asset long-term, but the near-term collateral value supporting a credit line can tighten—especially if a lender requires an updated appraisal or uses a conservative valuation.

This dynamic also links directly to renewal risk. CIBC estimates a subset of borrowers—roughly 6% of the mortgage portfolio—faces renewal payment increases of more than 40% in 2026, and the report adds that refinancing “pain relief” is harder in markets where prices are now below 2021 levels. In practical terms, the household that could have stretched amortization, consolidated debt, or rolled costs into a refinance during a rising market may find those options narrower when valuations fall.

A simple way to think about exposure is to separate payment risk from option risk. Payment risk is your new payment at renewal. Option risk is whether you still have flexible tools—refinance capacity, available equity, or a HELOC buffer—if you need them.

Why Small Units And “Strong Starts” Headlines Can Mislead

If the correction has a ground zero, CIBC argues it’s the condo segment—particularly smaller units in investor-heavy markets. The report describes condo prices nationally sitting well below their pre-pandemic trend and highlights that smaller condo units in the Greater Toronto Area have seen the largest price declines, which matters because small-unit owners are often newer buyers with higher leverage and less equity cushion.

For homeowners, this shows up in two ways. First, it can mean sharper valuation pressure on the exact property type most likely to be used as a stepping stone. Second, it can create a localized feedback loop: softer prices reduce investor demand, which can further weigh on small-unit resale values and limit refinancing options for highly leveraged owners.

The second pressure point is construction—and it’s counterintuitive. The report warns that headline “housing starts” can look resilient while real on-the-ground activity is weaker, because the official definition of a start is recorded only when a foundation reaches grade, which can be 1–2 years after actual project commencement for large multi-family buildings. That makes starts a lagging signal that can reflect decisions made in a different economic environment.

Why should homeowners care? Because a lot of household decision-making—buying, selling, or renovating—implicitly assumes that “more approvals and more starts” will translate into near-term supply relief or lower construction costs. In a correction, that assumption can break.

Even approvals can be a mirage. A January 2025 City of Surrey media release notes the city had over 44,300 units with rezoning conditional approval awaiting construction alongside thousands more with issued building permits at various stages, underscoring how large the “approved pipeline” can look even when the timing of actual delivery is uncertain.

Layer in labour constraints and the homeowner takeaway becomes clearer: renovation quotes and timelines can stay sticky even while resale prices soften, because the construction side of the market doesn’t reset instantly—and because trades capacity can be pulled toward infrastructure work that competes for similar skills.

The Negative Wealth Effect Is Psychological, But The Drag Is Real

Homeowners don’t just use home equity as collateral—they use home values as a confidence signal. When values rise, many households feel comfortable replacing a car, taking on a renovation, or saying yes to a big expense. When values fall, the opposite can happen even if the mortgage payment hasn’t changed yet.

CIBC’s report leans on past central-bank research on the “housing wealth effect,” pointing to an estimate that every $1 increase in housing wealth can add roughly 5–6 cents to consumer spending, while suggesting the effect from financial-asset gains is comparatively small. The report then runs the logic in reverse: if housing wealth declines, the implied consumption hit can be meaningful on a per-household basis, with a downside that could be larger than the upside when prices rise.

For a homeowner, the practical implication isn’t to panic—it’s to recognize why the economy can slow even without a wave of forced sales. If enough households feel poorer on paper, discretionary spending tends to get trimmed. That can show up as cancelled renovation plans, delayed appliance replacements, or fewer “nice-to-haves” in monthly budgets, which then feeds back into broader economic activity.

This is also where “two households, same income” can diverge. A homeowner with a stable job but a sharply corrected condo valuation may behave more cautiously than a homeowner with the same income and a home that has held value. Behaviour changes first; transactions often follow later.

What To Re-Check When The Story Shifts From Boom To Correction

This isn’t a call to make a drastic move. It’s a prompt to update your assumptions so you’re not surprised at the moment you need flexibility.

Here are the homeowner-level checks that matter most in a correction:

• Know your renewal window and your “option set.” The most stressful moments are rarely the ones you can see coming. What changes outcomes is whether you still have flexibility—time, cash reserves, or refinancing options—when conditions tighten.
• Treat your home value as a range, not a point estimate. In a softer market, the spread between what you think you could get and what the market proves can widen, and lenders may anchor to conservative valuations.
• Estimate your LTV exposure in plain terms. You don’t need to do lender math to understand directionally whether you’re becoming more or less leveraged as values move.
• If you own a condo, benchmark against your segment—not the national headline. The report’s emphasis on smaller units is a reminder that “the market” is really many micro-markets moving at different speeds.
• Separate renovation desire from renovation timing risk. Softer resale prices don’t automatically mean cheaper renos, especially if labour and project pipelines don’t loosen quickly.
• Watch your own “wealth effect.” If you feel yourself pulling back spending because your home “feels worth less,” you’re experiencing the behavioural channel economists are worried about—knowing that helps you plan rather than react.

The core message from CIBC is not that every homeowner is in trouble. It’s that Canada’s housing market is in a correction where the downstream impacts can show up through credit availability, renewal stress, and spending psychology—often before the for-sale signs multiply. If your household has relied on rising values as a safety net, this is the moment to measure that net realistically.