Experts see some resiliency in Alberta real estate markets as oil prices collapse
Photo: Michael Gil/Flickr
It’s not all doom and gloom in Alberta real estate — which once fed off the strength of its homegrown oil sector but has since been battered by the commodity’s low price — experts suggest.
For Geneva Tetreault, the Edmonton Real Estate Board’s 2015 chair, the pricing levels sustained in her city came as somewhat of a surprise. “I think that we anticipated there to be a little bit more downward pressure on price mainly as inventory levels have increased,” the Century 21 realtor says.
The average price across all residential properties in Edmonton was up 1.5 per cent from 2014, according to the city’s real estate board, despite declines in the second half of the year.
When inventory levels rose in 2015, buyers who had been waiting in the wings through 2014 — a period of uncommonly tight supply — pounced, which ended up supporting market activity and prices in the first half of the year, explains Tetreault. It also boosted the year-end totals that followed, although Tetreault adds prices started to come down in autumn.
Even if annual numbers mask worsening trends, there are positives blunting the impact that the energy-sector downturn has had on Edmonton so far. “We’ve actually done a really good job in increasing some job opportunities in the Edmonton area. There’s a lot of development and construction happening,” Tetreault says, citing the city’s Ice District as an example of an employment booster.
“Some of these positive things that were started prior to the drop in oil and the economic uncertainty are going to help us ride through, I think, some of the turmoil that’s going to come still in this year — or maybe even two.”
“We’re also seeing people move from surrounding communities in towards Edmonton,” Tetreault continues. In particular, former residents of Fort McMurray, an urban service area in the oil sands’ core, are resettling in Edmonton. Employment prospects in the capital of Alberta aren’t as tied to the energy sector as some other markets, partly due to civic jobs, she explains.
Ann-Marie Lurie, chief economist for the Calgary Real Estate Board, says the organization had predicted stronger price performances in Calgary for 2015 — based partly on low inventory levels and an energy industry recovery that never came — however, she has seen positives in the market, too.
“There wasn’t price declines across every district of our city, and that’s what was interesting,” she noted. “Often people say, ‘Well, there’s been a price decline and downward pressure on pricing,’ but that didn’t happen across the board.”
One relatively affordable part of the market in particular outperformed the others: detached homes with price tags of under $500,000. “That supply-and-demand balance for the under $500,000 (homes) has actually been relatively normal, so we actually had price appreciation in some of the areas of the city that really have most of those homes,” says Lurie.
She points to home prices in northeast Calgary — where there are many homes available for less than half a million dollars — rose 5.72 per cent from last January to December.
The 2015 composite benchmark home price in Calgary edges upwards when stacked against totals from the previous year (though in its forecast for 2016 released this week, it calls for a fall in dwelling prices and sales).
“People need to live somewhere,” says Lurie. “There’s always things in people’s lives that make them have to either purchase or sell a home — there’s always a level of activity.”