Photo: Jason Woodhead/Flickr
Fort McMurray’s housing market hasn’t had it easy over the past several years.
The northern Albertan city, where home values are especially sensitive to shocks in the boom-and-bust oil sands that support the local economy, saw prices peak in May 2012 at an average of $660,000. Today, they are around $350,000.
But new analysis from Eitel Insights, which regularly applies stock-market style technical analysis to real estate markets across Canada, suggests Fort McMurray is poised for a price boom over the coming years.
“The bloodletting has stopped,” company founder Dane Eitel tells Livabl. “We can’t seem to get any more momentum going lower,” he says of prices.
In analysis, Eitel Insights focuses on home-pricing patterns and housing inventory stats rather than other fundamentals such as oil prices or provincial GDP, as these factors are lagging indicators, Eitel suggests.
“The inventory is actually starting to settle for the first time in a number of years. So the demand’s picked itself up off the floor,” says Eitel, who adds housing demand in Fort McMurray bottomed out in May 2016.
As well, prices have collapsed to where they stood in 2006, when the last exuberant run-up began. “This is, technically speaking, the rationale for why the market will finally find its base,” according to Eitel Insights analysis.
Eitel does not expect the market to pick up for about a year, but when it does, he anticipates it will mark the beginning of a price boom that should persist for about half a decade, bringing values back up to the 2012 high.
“We’re still technically in this downtrend. But what we’re saying is this downtrend is not going lower over the next year,” says Eitel. “We will break the downtrend.”
In the meantime, Fort McMurray is the second most affordable housing market in the world, according to Demographia’s International Housing Affordability Survey: 2019.
To measure affordability, Demographia divides the average house price by the average household income to come up with a median multiple, or price-income ratio.
According to the study, the average house price in Fort McMurray is 2.2 times the average annual income.
Compare that to Vancouver — the second least affordable market out of the more than 300 metro areas Demographia studied — which has a price-income ratio of 12.6.