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

Author/Editor:

Evridiki Tsounta

Publication Date:

October 1, 2009

Electronic Access:

Free Full text (PDF file size is 1140 KB).Use the free Adobe Acrobat Reader to view this PDF file

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:

English

Publication Date:

October 1, 2009

ISBN/ISSN:

9781451873825/1018-5941

Stock No:

WPIEA2009235

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

20

Please address any questions about this title to publications@imf.org