Is the Canadian Housing Market Overvalued? A Post-crisis Assessment
IMF Working Papers, October 1, 2009
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- Is the Canadian Housing Market Overvalued? A Post-crisis Assessment
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Bibliographic details
- Authors: Evridiki Tsounta
- Published: October 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873825.001
Overview and main findings
- Canadian house prices increased significantly between 2003 and early 2008, with a marked downward trend since mid-2008, especially in the resource-rich western provinces.
- Following recent declines, home prices are now generally close to equilibrium throughout Canada.
- House prices in Alberta and British Columbia remain around 8 percent overvalued at the end of the sample (second quarter of 2009).
- Despite limitations of econometric estimates of house-price dynamics, the measured small degree of overvaluation suggests that the Canadian housing market is essentially at equilibrium.
Method, scope, and limitations
- The paper estimates the evolution of equilibrium real home prices during the period 2003 through the second quarter of 2009 in key provinces.
- The analysis recognizes limitations of econometric estimates of house-price dynamics; conclusions are qualified by these methodological constraints.
Key statistics and dates
- 2003 (start of noted price increase)
- early 2008 (peak of significant increase)
- mid-2008 (onset of marked downward trend)
- second quarter of 2009 (end of sample)
- Alberta and British Columbia: around 8 percent overvalued (at end of sample)
- Pages: 20
- Volume: 2009
- Issue: 235
- Series: Working Paper No. 2009/235
- DOI: https://doi.org/10.5089/9781451873825.001
- Stock No: WPIEA2009235
- ISBN: 9781451873825
- ISSN: 1018-5941
Subject areas and keywords
- Subject: Asset bubbles, Housing, Housing prices, Inflation, Mortgages
- Keywords: equilibrium price, house price, housing market, price, understanding housing price dynamics, WP
Is the Canadian Housing Market Overvalued? A Post-crisis Assessment — Evridiki Tsounta, IMF Working Papers, October 1, 2009.