The effects of oil prices and other economic indicators on housing prices in Calgary, Canada

This thesis aims to answer: (1) to what extent can oil prices and other economic indicators predict the changes in housing prices and rent in the Calgary single family housing market and (2) to determine what the lag time is between them. Implications of this study from a macro perspective are multiple. This study can be used as a simplified case study in isolating the effects of the boom and bust cycles of economic industries and quantify its impact to real estate performance. Results found an astonishing correlation. Oil prices, exchange rate, interest rate and employment levels can determine up to 98% of the changes in house prices and rents. Oil prices, representing economic viability of the city, affect the real estate industry with a lag of 7 quarters of approximately two years, while interest rates representing the financial well-being of the city affect house prices and rents with a lag of 2 1/2 years. Foreign exchange rate to the dollar, representing the relative global prosperity, affects real estate prices in one year. House prices seem to be equally sensitive to a positive or negative shock in oil prices, exchange rate, and interest rates. At which, $25/barrel oil price seems to be the "breakeven" level at which house prices remain stable, all else equal.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Architecture.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Padilla, Mercedes A. (Mercedes Angeles)

Advisor dc:contributor.advisor

• William C. Wheaton.

• Architecture.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/33193

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/33193