Author and portfolio manager Hilliard MacBeth said that residents and industry players might have a mistaken impression of the city as a market that is impervious to recessions.
“People have been lulled into the idea that house prices always go up,” MacBeth said in an interview with CBC News
As an example, MacBeth cited the recent phenomenon of builders demolishing old properties in the city’s neighbourhoods and building new homes on top of those, in the hopes of selling these for a profit once completed.
In its latest set of data releases, the Realtors Association of Edmonton announced a 2 per cent decline of median home prices in the city, as well as 2 per cent lower sales volume. Similarly, an Environics Analytics report stated that Alberta’s household net worth dropped by 0.7 per cent to $763,812 as a consequence of flagging petroleum prices.
“Canada is really a tale of two economies at the moment,” according to Peter Miron of Environics Analytics. “We saw the oil-based provinces, especially metro centres, really taking a beating relative to the rest of Canada. Those provinces are facing significant headwinds. They might not necessarily be in a recession, but they are definitely struggling.”
MacBeth advised prudence on the part of would-be owners, renting for a few years while getting a feel of the market climate. This would be a viable course of action since one- and two-bedroom apartments are going for a bargain right now, and renting would allow young families to save more for their eventual mortgages.
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While Edmonton has proven resilient against the weak performance of oil in the past few quarters, an observer argued that the city is particularly susceptible to the risk of a hypothetical housing crash in the near future.