“The good news for investors is that there’s more selection on the market but no price reductions,” said Phil Wazonek, an investor and Realtor at Distinctive Realty Services.
“The drop in oil prices is having a psychological effect but no tangible effect on the market.”
The Conference Board of Canada said last week that, after four years of phenomenal growth, Alberta’s economy will take a significant hit in 2015 and 2016, shrinking by 1.5 per cent, due to the downturn in the energy sector.
A survey of Canadian housing analysts, published by Fortress Real Development, found that 38 per cent said the decline in oil prices would not influence the value of Canadian homes, while 31 per cent said Alberta real estate would be negatively impacted.
Investors in the Alberta market say there is a general feeling that the oil prices won’t stay low for too much longer. “In my opinion, as long as low oil prices do not last too long, they shouldn’t have too much impact on real estate prices,” added Wazonek.
While the price of oil has dropped 60 per cent in the past six months, the significant fall out predicted by economists has so far looked more like an adjustment.
According to the CREA, inventory was 80 per cent higher in February 2015 compared to February 2014. During the same time frame, sale prices were only down four per cent.
CMHC’s latest housing starts data
also shows a market that is persevering. While new single detached were down slightly between February 2014 and February 2015, all other types of housing starts were up, leading to a total increase of 31 per cent in the province.
“People are not panicking (at least not yet) so this has not created any ‘buy’ opportunities for investors,” continued Wazonek. “It appears that investors are watching but aren’t buying, taking a ‘wait-and-see’ approach.”
Meanwhile, Alberta’s premier has said there will be salary cuts coming to the province’s public sector employees.
“While this does not impact the economy today or in the near future, if he implements the types of cuts he is talking about, it will have an impact on the economy,” added Wazonek.
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Declining oil prices in Alberta may be having a psychological impact on investors in the province, but it’s definitely not a buyer’s market yet, says one expert.