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

Abstract
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
Table Of Contents
Intro -- Contents -- I. Introduction -- II. Recent Housing Market Developments -- A. The Run-up in House Prices and Construction -- B. Reversal in House Prices -- III. Macrofinancial Linkages from the Housing Market -- IV. Existing Literature -- V. Econometric Model and Results -- VI. Conclusions -- References -- Figures -- 1. Canada. Cummulative Increase in Resale House Prices -- 2. G-7. Price-to-income and price-to-rent ratios, 1970-2009 -- 3. Select Eastern Canadian Provinces: House Price Over/Undervaluation, 1993Q1-2009Q2 -- 4. Select Western Canadian Provinces: House Price Over/Udnervaluation, 1993Q1-2009Q2 -- Tables -- 1. Real Prices of New Houses and Land, 1995-2009Q2 -- 2. Determinants of House Prices in Select Canadian Provinces
Language
eng
Literary Form
non fiction
Edition
1st ed.
Note
"October 2009."
Physical Description
20 p., ill.
Specific Material Designation
remote
Form Of Item
online
Isbn
9786612844362

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