By David Rosenberg and Krishen Rangasamy

The Canadian housing bubble has popped, with prices down 14 per cent from the peak reached in the first quarter of the year. Looking at home affordability — the ratio of mortgage payments to income — we estimate it will take another 25 per cent drop in home prices for affordability to return to its historic average. That would chop roughly $1 trillion in home equity, enough to generate serious negative wealth effects.

Tack on the impact of the Bank of Canada's policy tightening on interest payments by households, and it's not hard to see consumption spending treading water come 2023.