It’s well-known by now that Alberta has had a rough couple of years.
Following the massive oil crash, dropping oil prices by more than 60%, thousands lost their jobs in one of Canada’s primary “have” provinces. This has led to reduced spending, wages, and overall real estate transactions.
That said, Calgary has not seen a great change in new listings compared to this time last year, and the year before. In the first half of 2015, Calgary had 10,756 listings, as opposed to 10,326 during the same time this year. Edmonton followed a similar pattern: 10,444 in the first half of 2015, 9,988 in 2016.
So, how did the real estate markets in both Calgary and Edmonton manage to weather the storm? Why have prices stayed relatively the same?
Workers migrated back home
Luckily for much of Alberta, many of the workers who were employed in the oil sector arrived from other provinces. While this may seem like a massive detriment to the province—a massive outflux of locals—it’s actually what’s saved the Calgary real estate market from crashing.
These temporary workers, called “itinerant workers”, were employed here but kept their primary residences elsewhere, travelling back and forth for work every few weeks. This means they were participating in their own local economies more often than in Calgary, which includes buying and selling property.
The rental market is struggling
Because of the reliance on these itinerant workers, there is a sudden surge in the amount of vacant homes. For example, Calgary saw 12,526 vacancies in 2015; today, there are 20,843, a difference of over 8,000 homes. That puts the vacancy rate at 4.3%, a number that should be concerning for all Albertans.
However, the majority of those vacancies are rentals. While most itinerant workers rented in the oil-driven communities of Fort McMurray and Slave Lake, rentals across the province are sitting empty. Owner-occupied homes actually rose by over 3,000 year-over-year, meaning the real estate market remains fairly healthy.
Not out of the woods yet
After nearly two years of economic downturn in the province, Alberta may start to see home prices reflect their struggling economy. CBC reported that Calgary has been lucky in that it hasn’t seen economic distress like this since the 1980s, meaning residents now are not familiar with what that could look like.
A stagnant rental market with a high vacancy rate will not help, as owners with apartments to rent out will also be looking to sell and flee, pushing housing prices even lower.
And if, in a worst-case scenario, the Toronto real estate market and Vancouver real estate market both receive even the smallest correction in the next year, that means many of Canada’s largest housing markets will suddenly look a lot different, affecting the entire country’s economic future.