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Here’s why: The Canadian economy is highly levered to the real estate market and its derivative industries, such as construction. These housing-related industries account for 27% of the Canadian economy, compared to 24% at the peak of the housing boom for the U.S. In other words, employment in construction and real estate is generally much higher now in Canada than it ever was in the U.S.

Add to that residential housing inventories are at cyclical highs. In recent years, there have been 210,000 housing starts on average annually, but the high-end of the demand has peaked at about 185,000. Having out-built our historic demographic demand, sales are now declining and inventories are rising. Meanwhile, developers and home builders witnessing this carnage are more inclined sit on the sidelines and wait it out. To wit, housing starts declined to an annualized 170,000 in March, down from 178,000 in February.

Bricks and mortar has a psychological component that can breed confidence or banish it just as easily. As house prices rise, people tend to spend more, in fact nine cents of every dollar increase in home equity winds up back in the economy through consumption because folks are more willing to pull equity out of their homes to make other purchases. If house prices are falling, as they have been in recent months, the reverse happens because people are less inclined to pull equity out of a falling asset. “Overall, we think existing home sales will continue to decline with negative implications for the elevated level of home building and broader knock-in implications for domestic demand growth,” David Madani, an analyst with Capital Economics, wrote in newsletter Friday.