Alberta house prices poised to plummet, says federal agency

Worst-case scenario could see house prices drop 20 per cent

Alberta house prices could drop nearly 20 per cent this year, under the most pessimistic scenario released by the Canada Mortgage and Housing Corp.

The federal agency projects the fall in house prices could range from around 10 per cent to just over 19 per cent — a scenario that would see last year’s average house price of $380,000 sink to $306,000.

The special report says Alberta and Saskatchewan could be the hardest hit provinces for house sales, starts and prices.

“This reflects additional pressure on housing markets in these oil-producing provinces from negative economic impacts of lower oil prices,” says the report.

Central Alberta Realtors Association president Allan Melbourne doubts home sellers and buyers are going to witness that kind of price swing.

“Are there going to be some price adjustments? Could be.

“Is it going to be these kind of numbers? I don’t think so. I don’t see that.”

While the combined impact of low oil prices and COVID-19 hit local real estate markets hard, pricing has crept down, but not plummeted.

“Prices have been reasonably consistent. It’s all based on supply and demand,” said Melbourne, who is a realtor with Re/Max Real Estate Central Alberta and has been in the business for about 13 years.

“Right now, it seems like the market is starting to inch its way back.”

April was a terrible month for central Alberta real estate — with sales of all units down 47 per cent from April 2019. From the start of the year, home sales are down 17 per cent though, compared with the same period last year.

The average sale price of central Alberta properties was down 13 per cent — $261,652 last month, compared with $301,822 in April 2019.

From 2019 to 2016, the average sale price has hovered around $295,000 to $315,000.

This month, sales are up more than 20 per cent over April, a sign hopefully, that real estate markets and consumer confidence are rebounding, said Melbourne.

“I don’t think we’re in the doom and gloom in central Alberta.”

He offers a word of caution, however. Without knowing how quickly the energy industry will bounce back, or what the economic impacts of the pandemic are going to be, predictions are only best guesses.

CMHC forecasts housing starts will plunge between 51 and 75 per cent nationwide this year from pre-COVID levels. Housing starts are not expected to recover completely until at least 2023.

In Alberta, there were just over 30,000 housing starts last year.

“Following large declines in 2020, housing starts, sales and prices are expected to start to recover by mid-2021, as pandemic containment measures are lifted and economic conditions gradually improve,” said Bob Dugan, CMHC’s chief economist, in a statement.

“Sales and prices are likely to remain below their pre-COVID-19 levels by the end of our forecast horizon in 2022. The precise timing and speed of the recovery is highly uncertain, because the virus’s future path is not yet known.”

Steve Bontje, managing partner with Red Deer’s Laebon Developments, said CHMC numbers tend to be on the high side, but there is no doubt the central Alberta housing industry has been hard hit.

“The housing market in central Alberta has been struggling along for a number of years,” said Bontje. “This last few months certainly has not helped anything.

“I would expect that our numbers, at best, are going to where they’ve been for the past couple of years. And at worst, who knows?

“We’re off 30 or 40 per cent from not that long ago.”

According to CHMC statistics, there were 98 housing starts in Red Deer last year, down from 118 in 2018. In 2014, when the economy was humming, there were 393, and in the boom year of 2007, the city saw 974 houses started.

Bontje said builders are doing what they can to adjust to the market.

“We’re cautiously optimistic we’re going to see some new activity after all of this. You have to be conservative and very aware there are challenging times coming.

“You have to go back to basics and focus on making sure you have the right product, at the right price, that new homeowners are looking for, and being able to provide the best value for their money.”



pcowley@reddeeradvocate.com

Like us on Facebook and follow us on Twitter

Housing

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

230 new COVID-19 cases reported over the weekend

City of Red Deer has nine active cases

City grapples with choosing public art

‘Art is in the eye of the beholder’

Wage subsidy will be extended until December amid post-COVID reopening: Trudeau

Trudeau said the extension will ‘give greater certainty and support to businesses’

As postponed NHL season resumes, some fans say the lure of parties will be strong

EDMONTON — As hockey fans gear up for a truncated season to… Continue reading

QUIZ: Are you ready for a summer road trip?

How much do you really know about roads, motor vehicles and car culture? Take this quiz to find out.

David Marsden: The remaking of Westerner Park

Red Deer residents have been tested by the COVID-19 pandemic in innumerable… Continue reading

In reversal, UK says it will make masks mandatory in shops

LONDON — The British government decided Monday to require people to wear… Continue reading

New Zealand opposition leader quits 2 months from election

WELLINGTON, New Zealand — The leader of New Zealand’s opposition National Party… Continue reading

Federal judge voids Georgia ‘heartbeat’ abortion restriction

ATLANTA — A federal judge on Monday permanently blocked Georgia’s 2019 “heartbeat”… Continue reading

Mayor: US Marshals investigate shooting at Portland protest

PORTLAND, Ore. — The U.S. Marshals Service is investigating after a protester… Continue reading

Statistics Canada analysis suggests small hit to inflation from pandemic

OTTAWA — Statistics Canada says Canadians’ buying patterns changed so much during… Continue reading

Return of North American economy will negate need for tariffs, PM tells Trump

WASHINGTON — Prime Minister Justin Trudeau urged Donald Trump to think twice… Continue reading

Pieridae Energy says engineering company seeking exit from Goldboro LNG deal

CALGARY — The engineering company hired to build the proposed Goldboro LNG… Continue reading

Most Read