Is Canada’s housing market overvalued? According to the International Monetary Fund (IMF) – an international organization that seeks to ensure global financial stability – the answer is ‘not really’.

The organization’s recent working paper, which was released in October, reveals that while many parts of the country were reaching levels of housing overvaluation in 2007, that’s not the case anymore. Basing its conclusions on the CREA price index, the IMF suggests that, unsurprisingly, the Western provinces – namely, British Columbia, Alberta and Saskatchewan – are slightly overvalued, but not to an extent where there’s going to be a major crash.

The report says part of the influx in Western housing prices that have occurred over the past decade has been in response to the “underreaction” of housing prices during the 1990s. The hot housing markets in the 2000s brought these three regions to equilibrium, although they started to become overvalued in 2007. At this time, the IMF estimates Alberta housing prices were about 25% above equilibrium, and BC and Saskatchewan were about 17% above where they should have been.

Things started to slow down at the end of 2007 and early 2008, causing a large contraction. According to the report, housing prices in BC and Alberta are now around 8% overvalued, and those in Saskatchewan are approximately 5% higher than they should be.

This overvaluation is relatively small in the grand scheme of things, the IMF notes, and it’s unlikely that there’s going to be a large negative impact. The fact that the housing market is already showing strong signs of revival in these regions, in addition to the fact that commodity prices have increased compared to 2008, further supports this fact.