Is the Canadian Housing Market Overvalued? A Post-crisis Assessment

October 1, 2009

Preview Citation

Format: Chicago

Evridiki Tsounta. Is the Canadian Housing Market Overvalued? A Post-crisis Assessment, (USA: International Monetary Fund, 2009) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Canadian house prices have increased significantly between 2003 and early 2008, with a marked downward trend since mid-2008, especially in the resource-rich western provinces. This paper estimates the evolution of equilibrium real home prices during this period in key provinces and finds that, following recent declines, home prices are now generally close to equilibrium throughout Canada. However, house prices in Alberta and British Columbia remain around 8 percent overvalued at the end of the sample (second quarter of 2009). Despite the limitations of econometric estimates of house-price dynamics, the measured small degree of overvaluation suggests that the Canadian housing market is essentially at equilibrium.

Subject: Asset bubbles, Housing, Housing prices, Inflation, Mortgages

Keywords: Equilibrium price, House price, Housing market, Price, Understanding housing price dynamics, WP

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/235
Stock No:

WPIEA2009235
ISBN:

9781451873825
ISSN:

1018-5941

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