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Canadian city housing prices and urban market segmentation

Author

Listed:
  • Jason Allen
  • Robert Amano
  • David P. Byrne
  • Allan W. Gregory

Abstract

This paper provides a detailed empirical analysis of Canadian city housing prices. We examine the long-run relationship between city house prices in Canada from 1985 to 2005 as well as idiosyncratic relations between city prices and city-specific variables. The results suggest that city house prices are only weakly correlated in the long run and that there is a disconnect between house prices and interest rates. City-specific variables such as union wage levels and the issuance of building permits tend to be positively related to existing city house prices. Surprisingly, there is mixed evidence with respect to standard measures of economic activity such as per capita GDP and interest rates.

Suggested Citation

  • Jason Allen & Robert Amano & David P. Byrne & Allan W. Gregory, 2009. "Canadian city housing prices and urban market segmentation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1132-1149, August.
  • Handle: RePEc:cje:issued:v:42:y:2009:i:3:p:1132-1149
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jbfina:v:83:y:2017:i:c:p:121-134 is not listed on IDEAS
    2. Jason Allen & Darcey McVanel, 2009. "Price Movements in the Canadian Residential Mortgage Market," Staff Working Papers 09-13, Bank of Canada.
    3. Tse, Chin-Bun & Rodgers, Timothy & Niklewski, Jacek, 2014. "The 2007 financial crisis and the UK residential housing market: Did the relationship between interest rates and house prices change?," Economic Modelling, Elsevier, vol. 37(C), pages 518-530.
    4. International Monetary Fund, 2009. "Canada; Selected Issues," IMF Staff Country Reports 09/163, International Monetary Fund.
    5. Julien Reynaud, 2015. "Gauging Housing Supply in Canada; A Stock Approach," IMF Working Papers 15/128, International Monetary Fund.
    6. Luis M. Cubeddu & Camilo E Tovar Mora & Evridiki Tsounta, 2012. "Latin America; Vulnerabilities Under Construction?," IMF Working Papers 12/193, International Monetary Fund.
    7. Evridiki Tsounta, 2009. "Is the Canadian Housing Market Overvalued? A Post-crisis Assessment," IMF Working Papers 09/235, International Monetary Fund.
    8. Andrés Alegría, & Rodrigo Alfaro & Felipe Córdova, 2017. "The Impact of Warnings Published in a Financial Stability Report on the Loan to Value Ratio," Working Papers Central Bank of Chile 798, Central Bank of Chile.
    9. Hajime Tomura, 2008. "A Model of Housing Boom and Bust in a Small Open Economy," Staff Working Papers 08-9, Bank of Canada.
    10. Kartashova, Katya & Tomlin, Ben, 2017. "House prices, consumption and the role of non-Mortgage debt," Journal of Banking & Finance, Elsevier, vol. 83(C), pages 121-134.
    11. Andrés Alegría & Rodrigo Alfaro & Felipe Córdova, 2017. "The impact of warnings published in a financial stability report on loan-to value ratios," BIS Working Papers 633, Bank for International Settlements.
    12. Lutz Kilian & Xiaoqing Zhou, 2018. "The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada," CESifo Working Paper Series 7005, CESifo Group Munich.
    13. Islam, Shahidul, 2007. "Neighbourhood Characteristics and Adjacent Ravines on House Prices," Annual Meeting, 2007, July 29-August 1, Portland, Oregon 10250, Canadian Agricultural Economics Society.
    14. Rose Cunningham & Ilan Kolet, 2007. "Housing Market Cycles and Duration Dependence in the United States and Canada," Staff Working Papers 07-2, Bank of Canada.
    15. Allen Head & Huw Lloyd-Ellis & Hongfei Sun, 2014. "Search, Liquidity, and the Dynamics of House Prices and Construction," American Economic Review, American Economic Association, vol. 104(4), pages 1172-1210, April.
    16. Marsha J. Courchane & Cynthia Holmes, 2014. "Bubble, Bubble ¡V Is there House Price Trouble -- in Canada?," International Real Estate Review, Asian Real Estate Society, vol. 17(1), pages 109-135.
    17. Allen Head & Huw Lloyd-Ellis & Hongfei Sun, 2016. "Search, Liquidity, and the Dynamics of House Prices and Construction: Corrigendum," American Economic Review, American Economic Association, vol. 106(4), pages 1214-1219, April.
    18. Tomura, Hajime, 2010. "International capital flows and expectation-driven boom-bust cycles in the housing market," Journal of Economic Dynamics and Control, Elsevier, vol. 34(10), pages 1993-2009, October.

    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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