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According to the BMO, the rapid escalation in home prices and construction added 0.56 percentage points to annual growth during those six years, and “lifted household wealth, confidence and borrowing ability.”

But now, with home values at or near record levels throughout the country and many economists predicting some kind of correction, the opposite scenario would unfold from a price and accompanying construction drop.

“This suggests a moderate correction could have a meaningful slowing effect,” Guatieri says in a report issued Friday.

“Based on our model, a 10% decline in prices and construction reduced annual growth by one percentage point, with the two channels contributing equally. Given underlying growth of just over 2%, prices and construction would need to fall more than 20% to spur a contraction.”

Guatieri adds that given the record levels of household debt accumulated by families, the negative impact of a correction could even be worse than the bank’s models project.

On Wednesday, Bank of Canada governor Stephen Poloz said while a housing correction remains a risk to the economy, the most likely outcome was for a “soft landing.”

The central bank took comfort in the fact price increases had moderated and that household debt levels had stabilized — while remaining elevated — at 164% of disposable income.

The BMO report does not suggest a major correction is in the offing, as some economists have predicted. In fact, it argues the opposite. Guatieri says the so-called “bubble” in housing is exaggerated and that Canada is not in the same position the U.S. found itself prior to the 2007 crash.