Alberta’s Real Estate Slump Leaves Others Wondering Who’s Next?
With the oil boom going bust, mortgage brokers are busier than ever locking in low interest rates on mortgages for those nervous about their future in the industry. Alberta’s housing market is slumping and sales are down 14.7 percent from last year.
“A lot of people in the oil and gas sector are not sure if their jobs are going to be around or if they are going to be making as much money. We’re trying to coach them to be prepared,” said Adil Mawji, President of the Alberta Mortgage Brokers Association.
The blush is definitely off Alberta’s wild rose as Alberta’s oil prices bottom out with an 11 year low. Confidence has been shaken since the province lost 20,000 to 30,000 jobs earlier this year and that's being reflected in the 2.8 percent drop in prices being predicted by CREA this year. “We’re starting to see a trend toward values dropping,” Mawji reported.
Some economists are now predicting that Alberta’s lagging property prices might spread to other provinces, especially hot housing markets like Toronto and Vancouver. While these cities show little evidence of slowing down, David Madani, an Economist with Capital Economics, state that housing sales will correct by 30 percent.
In addition, the C.D. Howe Institute is also recommending that Canada set aside a $9 Billion fund to deal with a housing crash, much like the one experienced by the United States ten years ago. While some of the reports are pessimistic, CMHA doesn’t believe other provinces’ real estate markets will be affected in the same way.
Most other key markets for oil, such as Ontario and Quebec, may weather the downturn better. Their economies also rely on manufacturing industries, and these tend to do well when oil prices are low. While predictions are mixed, industry experts are warning househoulds to be cautious about their finances.
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