The outsized gains that Canada's economy has enjoyed on the back of the housing market can't continue as a real estate slowdown may already be underway, one of Canada's big banks warned Wednesday.

"Canada’s long housing cycle is turning," the Bank of Nova Scotia said in a research note Wednesday. "We expect the sector will remain on a more subdued trajectory over the next several years, imposing a modest drag on … growth."

The bank says that housing has contributed a huge percentage of Canada's GDP growth since 2000, adding about $1.7 trillion worth of economic activity since then and $128 billion last year alone.

Any discussion of real estate tends to focus on the price gains or declines recorded in the price of homes themselves. But the sector's real economic value comes from all the spinoff effects surrounding house sales — everything from realtor fees, to development costs, to purchases of new furniture to outfit all those monster homes.

The bank's eye-popping $1.7-trillion figure includes all of those factors, and it notes that the pace of growth in the housing sector has been outpacing that in the broader economy for a while now.

Residential housing investment has been expanding by about 4.2 per cent per year since the new millenium. That's almost twice as much as the 2.2 per cent average growth seen in Canada's economy overall.

Renovation spending higher

Within that, the area that's seen the most growth is renovation. Powered by higher home prices, cheap borrowing costs and many government incentive programs to invest in fixing up houses, renovation expenses have increased by about six per cent per year in Canada since 2000. That's "double the three per cent average annual increase in new construction, and three times the two per cent yearly growth in transfer costs," the bank says. "These record outlays have increased the quality of the housing stock, and contributed to price appreciation."

Housing's been especially valuable to the Canadian economy because it has a spillover effect into other areas, like consumer spending. For every $1 spent on housing, economists say about $1.50 worth of economic activity filters through the rest of the economy through things like movers, supply building materials, heating and cooling systems, and household appliances and fixtures.​

Real estate also creates a ton of jobs, the bank notes. Residential building construction employed 235,000 Canadians in 2011, Statistics Canada data shows, and real estate services sector counted another 245,000. Here again, the growth in employment in real estate-related industries has been about twice the rate seen in the rest of the economy since 2000.

Most mainstream economists today are of the view that Canada's housing market is in for a slow cooldown, and if that comes to pass homeowners and would-be buyers obsessed with the value of their own homes won't be the only victims — there will be a lot of side-effects in the broader economy, Scotiabank says.

"The impact of a softening housing market will be felt broadly," the banks said. "The likelihood of smaller household wealth gains as house price growth slows — or adjusts lower — will reinforce a more cautious trend in consumer spending.​"