The Implications of Global Oil Prices on Local Housing Markets: The Case of Canada and the United States

Abstract

We investigate the implications of global oil prices on local housing markets in Canada and the United States. Our results show that oil prices have a stable, positive and persistent impact on the housing market, although this positive impact is larger in smaller cities. The United States has a faster speed of adjustment and thus a higher response rate in face of an oil price change. We find that oil prices are only significant in the long run. The long run elasticities will be beneficial for policy implications and the short run impacts will help consumers improve their short run investment decisions.