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

 
Author/Editor: Tsounta, Evridiki
 
Publication Date: October 01, 2009
 
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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.
 
Series: Working Paper No. 09/235
Subject(s): Asset prices | Banking sector | Business cycles | Canada | Economic models | Fiscal policy | Household credit | Housing prices | Price increases

Author's Keyword(s): House prices
 
English
Publication Date: October 01, 2009
Format: Paper
Stock No: WPIEA2009235 Pages: 20
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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