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    COMM350: Research Proposal

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    Shayne Rebello
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    COMM350: Research Proposal

    Uploaded by

    Shayne Rebello
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    asd

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    350_ResearchProposal (1)

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    asd

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    51 views3 pages

    COMM350: Research Proposal

    Uploaded by

    Shayne Rebello
    asd

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    © All Rights Reserved
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    COMM350: Research Proposal

    October 11th 2017


    COMM350
    Professor Peter Sephton
    Jai Min Chung 10058905 Section 2
    Shayne Rebello Section 1
    Overview
    For the final term research paper, our team has elected to assess the Canadian housing market. Over
    the past 20 years, the housing market has experienced tremendous growth but has shown signs of
    cooling down recently. This has lead the general public to worry as many believe that we are in the
    midst of a housing bubble that is about to burst. On the other hand, others argue that the increase is
    fundamentally justified. Additionally, the Bank of Canada is paying close attention to the housing market
    as the fragility of the real estate market limits its ability to raise the interest rates and target inflation.
    Clearly, the housing market is one of the most dynamic and complex components in the Canadian
    economy today and is an important sector to understand .

    We plan to model the housing market by considering 3 main factorsdemand for housing, supply of
    housing and economic indicators. The question we are attempting to address is whether changes in
    residential housing price level are due to fundamental reasons, such as shifts in demand and supply.
    Furthermore, we would like to test if the housing market has gone through any structural change.
    Ultimately, we would like to forecast the housing prices by also incorporating macroeconomic factors.

    This topic is interesting because we are in the midst of one of the strongest housing bull markets ever
    witnessed and affordability is a very pressing issue today especially for young adults. Purchasing real
    estate is the single most expensive investment decision that young adults ever make. As future
    homeowners and potential investors in real estate markets, it is important to understand the factors
    that drive prices on a statistical level and predict future trends in the Canadian housing market.

    Data
    Dependent Variable:
    Composite 11 House Price Index: indexed at Jun-2005, monthly, Source: TeranetNational Bank House
    Price Index. (Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa-Gatineau,
    Montreal, Quebec, Halifax)

    Regressors:

    Demand Side:
    Average weekly earnings excluding unclassified businesses [11-91N] (V79311153): Survey of
    Employment, Payrolls and Hours (SEPH), employment and average weekly earnings (including overtime)
    for all employees by North American Industry Classification System (NAICS), seasonally adjusted,
    monthly (Dollars), (Jan-2001 Jul-2017) Source: CANSIM

    Employment Rate (LREM25TTCAM156S): Aged 25-54: All Persons for Canada, seasonally adjusted,
    monthly (Jan-1995 May-2017), Source: FRED

    Number of Immigrants in Canada (V29850342): International migration components, Canada, provinces


    and territories, quarterly (Persons), (Mar-1946 Jun-2017), Source: CANSIM

    Supply Side:
    Housing Starts in Canada (V52300170): Canada Mortgage and Housing Corporation, housing starts, all
    areas, Canada and provinces, seasonally adjusted at annual rates, monthly (Units) (Mar-1990 Jun-
    2017), Source: CANSIM

    Unabsorbed inventory (V1930754): Canada Mortgage and Housing Corporation, absorptions and
    unabsorbed inventory, newly completed dwellings, by type of dwelling unit in census metropolitan
    areas, monthly (Units), (Jun-1988 Aug-2017), Source: CANSIM

    Economic Indicators:
    2-year bond yield (V39051): Bank of Canada, money market and other interest rates, daily (Percent),
    (Jan-1995 Oct-2017), Source: CANSIM

    10-year bond yield (V39055): Bank of Canada, money market and other interest rates, daily (Percent),
    (Jan-1995 Oct-2017), Source: CANSIM

    Consumer credit and mortgage liabilities to disposable income (V62698065): National Balance Sheet
    Accounts, financial indicators, households and non-profit institutions serving households, quarterly
    (Percent), (Mar-1990 Jun-2017), Source: CANSIM

    Real GDP, chained 2007 (V65201210): Gross domestic product (GDP) at basic prices, by North American
    Industry Classification System (NAICS), seasonally adjusted at annual rates, monthly (Dollars) (Begin Jan-
    1997 Jul-2017), Source: CANSIM

    Retail trade (V52367097): Retail trade, sales by the North American Industry Classification System
    (NAICS), seasonally adjusted, monthly (Dollars), (Jan-1991 Jul-2017), Source: CANSIM

    Total outstanding mortgage (V122726): Residential mortgage credit, outstanding balances of major
    private institutional lenders, Bank of Canada, seasonally adjusted, monthly (Dollars) (Jan-1969 Aug-
    2017), Source: CANSIM

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