Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/200469 
Authors: 
Year of Publication: 
2018
Series/Report no.: 
Bank of Canada Staff Discussion Paper No. 2018-16
Publisher: 
Bank of Canada, Ottawa
Abstract: 
Existing home sales' share of Canada's economic pie has been rising in recent years, and variation around this trend has resulted in outsized contributions to changes in real gross domestic product (GDP). In this context, we use a cointegration framework to estimate the level of resale activity across the Canadian provinces that is supported by fundamentals - namely, full-time employment, housing affordability and migration flows - to help look through the volatility. The results suggest that, over longer horizons, resales activity and these fundamentals share a stable relationship, although deviations are sometimes persistent. We also find a robust and positive relationship between house price growth and deviations of existing home sales from fundamentals. While predicting quarterly changes in resales remains very difficult, provincial models improve upon national and naïve benchmarks and provide a useful framework for identifying risks to GDP growth that stem directly from the resale market.
Subjects: 
Econometric and statistical methods
Economic models
Housing
JEL: 
C
C2
C22
C23
E
E2
E27
R
R2
R21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
902.09 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.