The province isn`t just rich in oil, but the number of property owners now in default, according to the CIBC Household Credit Analysis report released Wednesday.
While the rate in Canada was 0.4 per cent in January, it was 0.7 per cent for Alberta.
Many of those borrowers were first drawn to the housing market by dreams of capitalizing on a buoyant pre-recession housing market.
“The pre-recession period in Alberta had seen activity surging rapidly, leading to a higher percentage of consumers overextending themselves to speculative investment activity and excess,” CIBC economist Benjamin Tal, author of the report. The higher rate “reflects the fact that, on average, homeowners in Alberta are younger and less established.”
Investors are once again clamouring to get into the Western province as its oil industry ramps up the call for workers. Many of those migrants are also looking for investment opportunities in the housing sector, especially in Edmonton and Fort McMurray where inventory challenges have bolstered rental values.
Still, that mad dash is slowing, says the report, pointing to softening mortgage activity since January.
“Note that the current rate is still double the rate seen before the recession, but is significantly below rates we have seen in previous recessions,” says CIBC.
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