Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/53968 
Year of Publication: 
2010
Series/Report no.: 
Bank of Canada Working Paper No. 2010-19
Publisher: 
Bank of Canada, Ottawa
Abstract: 
Using an error-correction model (ECM) framework, the authors attempt to quantify the degree of disequilibrium in Canadian housing stock over the period 1961-2008 for the national aggregate and over 1981-2008 for the provinces. They find that, based on quarterly data, the level of housing stock in the long run is associated with population, real per capita disposable income, and real house prices. Population growth (net migration, particularly for the western provinces) is also an important determinant of the short-run dynamics of housing stock, after controlling for serial correlation in the dependent variable. Real mortgage rates, consumer confidence, and a number of other variables identified in the literature are found to play a small role in the short run. The authors' model suggests that the Canadian housing stock was 2 per cent above its equilibrium level at the end of 2008. There was likely overbuilding, to varying degrees, in Saskatchewan, New Brunswick, British Columbia, Ontario, and Quebec.
Subjects: 
Domestic demand and components
JEL: 
E21
J00
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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