calgary-skyline Photo: Calgary Reviews

Make no mistake: Alberta has seen better days for real estate. But, as senior BMO economist Sal Guatieri emphasizes, it has also seen much worse.

In 2009, at the tail end of the Great Recession, benchmark Calgary home prices toppled 14 per cent, he notes. Yet in the past year, they have declined by 3.5 per cent — despite a backdrop of low oil prices and the job losses.

That fact anchors one of Guatieri’s main observations from a recent BMO Capital Markets feature: “Alberta is weathering the current downturn much better than the last one.”

According to the economist, here’s how.

“Providing support, the province entered the current slump with a tight supply of new homes, as well as only moderately elevated valuations,” explains Guatieri.

He also says public sector job gains (mostly in Edmonton, the province’s capital and civic centre) are countering the fallout from energy sector layoffs, a view Geneva Tetrault, the Edmonton Real Estate Board’s 2015 chair, shared with BuzzBuzzHome News in January.

Last month, Alberta’s unemployment rate was 7.1 per cent, down 0.8 percentage points from February, according to the latest Statistics Canada Labour Force Survey.

Meanwhile, historically low interest rates, which observers say are fueling Toronto and Vancouver’s white hot real estate markets, are also benefitting Albertans, albeit in a different way.

More manageable monthly mortgage payments from lower rates are keeping the number of delinquencies recorded across the province down. “While consumer insolvencies have spiked higher, mortgage defaults remain low,” says Guatieri.

The share of Alberta residential mortgages in arrears — so, more than three months behind in payments — was 0.29 per cent, roughly level with numbers from a year ago, when the share was 0.27 per cent.

The long-run norm is 0.43 per cent, while the height reached following the Great Recession is 0.84 per cent, according to an earlier BMO note.

“It’s noteworthy that the downturn in sales is already slowing, and the economy and housing market should stabilize next year as oil prices recover moderately,” he concludes.

If Guatieri’s outlook is right, anyone talking catastrophic real estate crashes in Alberta may just be all hat, no cattle.

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