Vacancy rates to stay high in this Alberta city

Landlords who were once the envy of their counterparts across the country are now facing rising vacancy rates with no expected influx of renters to fill them.

“A friend of mine is a Realtor with Colliers and he specializes in brokering apartments. He is only working three days a week; he has nothing to sell,” said Phil Wazonek of Distinctive Realty Services.

“The volume of home sales is down, immigration into the province is slowing and Fort McMurray has the highest apartment vacancy rates in Alberta."

Indeed, the latest figures from the Fort McMurray Real Estate Board showed that apartment sales were down dramatically year-over-year, from 28 in March 2014 to just eight in March 2015. Year-to-date sales for 2015 are down around 50 per cent, according to one local Realtor.

Bucking the trend, Jon Simcoe, an investor and the founder of Lion Properties in Fort McMurray, currently has tenants in all 15 of his rental properties.

“As soon as there are a few layoffs or the housing prices change a bit, you lose a bit of those transient people who are not here for very long,” added Simcoe.

“I think it’s better for the town in the longer run because it kind of cleans it up.”

And as the price of oil becomes more stable, home and apartment sale prices are actually on the rise. FMREB figures show that the average sale price for a townhouse in Fort McMurray actually increased year-over year by more than nine per cent, while the average sale price for an apartment/condo was up more than three per cent.

“We haven’t seen any substantial price reduction in homes or apartments,” added Wazonek. “The economy is shrinking but it is too soon to see any fallout in the real estate market.”

With the provincial election last week crowning the NDP, it will be interesting to see what direction the province takes next.

“This area could feel significant downward pressure in the short term, but things should level out,” said Todd Millar, investor relations at Glenn Simon Inc. “It’s just part of the ebb and flow of the market.”

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