A study of the Canadian property boom

Canadian real estate has experienced unprecedented rapid growth since the early 2000s. People are buying homes out of concern and hope that prices may continue to rise. The immediate consequence of this trend is the changes in affordability for Canadian households. Increasing number of individuals have had to shoulder debt burdens that exceed their capacity to pay as a result of the price inflation. This has generated significant risk for the financial system and the strength of the economy. The vulnerabilities due to the housing market performance may undermine economic fundamentals and weaken the economy's ability to withstand disruptions. In this paper, the present economic conditions are examined to understand the general health of the Canadian economy. A comparison between the housing market boom in Canada and the exuberance of the 2006 US housing is drawn to gauge the degree to which the former market performance is heated. In addition, an analysis of the key variables that has fed into the growth in home prices will be presented to address how these elements contributed to the price appreciation. The optimism around Canada's housing market is worrying and the impact could be debilitating to the country's economic well-being. In light of the novel Covid-19 pandemic and its effects on the economy, where home prices will go is ever-more relevant. The paper will discuss the vulnerabilities that undermine Canada's economic resilience and conclude that the present stability is unsustainable.

Name thesis:degree_name

Master

Department dc:contributor.department

Sloan School of Management

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2020

Author dc:creator

• Zhou, Shirley Xueer.

Advisor dc:contributor.advisor

• Roberto Rigobon.

• Sloan School of Management.

Statement dc:rights

• MIT theses may be protected by copyright. Please reuse MIT thesis content according to the MIT Libraries Permissions Policy, which is available through the URL provided.

Licence dc:rights.uri

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

Language dc:language.iso

eng

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/127000

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/127000