Simple progression - real estate market crashes - builders stop building and lay off construction workers while suppliers see sales drop and they lay off their workers. Now, even at lower prices, these workers can't buy houses or if they own a house, can't make mortgage payments (foreclosure). Since all these laid off workers have to cut back spending, away goes all the secondary spending generated by these jobs (auto manufacturers, waiters/waitresses, etc.) - in the U.S. (there is no reason to believe that Canada would be different) the multiplier is about 2.5 - that means for every construction job lost, an additional 2.5 jobs are lost throughout the rest of the economy.
Then there is the question of taxes - as prices drop, properties get re-assessed at lower rates meaning localities get less in tax revenues. Town, counties, and states have two options - raise taxes (which price people out of the market) or cut services (fewer police, fewer teachers, less road maintenance, etc.)
And then there is the unanswered question - what is the psychological impact of those who create foreign direct investment - if Canada banned FDI in one sector, what would stop the government from protecting other sectors the same way - leading the investors to stop investment or even pull current investment out of Canada. This reduction slows (and can even stop) Canadian economic growth (note Canada is already being affected by reduced foreign investment which is hurting its economy) and piled on top of a real estate crash with its resulting recession can quickly escalate to a major Canadian depression. Have fun with that.