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A Model of Housing Stock for Canada

Author

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  • David Dupuis
  • Yi Zheng

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.

Suggested Citation

  • David Dupuis & Yi Zheng, 2010. "A Model of Housing Stock for Canada," Staff Working Papers 10-19, Bank of Canada.
    • Handle: RePEc:bca:bocawp:10-19
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    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/07/wp10-19.pdf
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    References listed on IDEAS

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    1. Josep Lluís Carrion‐i‐Silvestre & Andreu Sansó, 2006. "Testing the Null of Cointegration with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(5), pages 623-646, October.
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    Cited by:

    1. Karimova, Amira, 2020. "Forecast of Ontario’s housing stock 2020-2046," MPRA Paper 103298, University Library of Munich, Germany.
    2. Julien Reynaud, 2015. "Gauging Housing Supply in Canada: A Stock Approach," IMF Working Papers 2015/128, International Monetary Fund.
    3. Maxime Desmarais-Tremblay & François Vaillancourt, 2011. "Le bilan des particuliers au Canada : évolution et analyse," CIRANO Project Reports 2011rp-17, CIRANO.
    4. Jaunius Karmelavičius & Ieva Mikaliūnaitė-Jouvanceau & Austėja Petrokaitė, 2022. "Housing and credit misalignments in a two-market disequilibrium framework," Bank of Lithuania Occasional Paper Series 42, Bank of Lithuania.

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    More about this item

    Keywords

    Domestic demand and components;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J00 - Labor and Demographic Economics - - General - - - General

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