In the aftermath of the first wave of the coronavirus pandemic, the Canadian real estate market went into overdrive, with sales activity and prices enjoying record-setting growth. The blend of near-zero interest rates, pent-up demand, and low inventory levels invigorated an already strong pre-pandemic housing sector, from the nation’s largest cities to rural communities. But not every city was celebrating record-smashing highs throughout 2020.
Fort McMurray is one of Alberta’s municipal gems, rich in natural beauty and a tight-knit community. Surrounded by extraordinary sights and sounds, including the Northern Lights, the city has a lot to boast about. But the city has also had to contend with a series of hurdles, including the collapse of the oil and gas sector in 2015, and again in early 2020; the consequences of which have trickled into the local real estate market.
It was not all bad news for the Western Canada town as it did experience some growth last year. Below we’re exploring the ups and downs of this local market over 2020, as well as projections for the year ahead.
Canadian Real Estate: Trends in the Fort McMurray, AB Housing Market
Fort McMurray enjoyed the effects of pent-up spring demand in the summer months, joining the rest of the Canadian real estate market’s boom. However, its local housing sector struggled to sustain the momentum in the final few months of 2020, despite lower levels of inventories.
According to the Alberta Real Estate Association (AREA), residential retail sales tumbled 45.3 per cent in December from the same time in the previous year. The total housing average price fell 6.1 per cent year-over-year in December to $315,210. Housing prices slipped about two per cent on an annual basis.
That said, some property types performed better than others to cap off 2020:
- Detached: +9.7 per cent to $445,688
- Semi-Detached: -7 per cent to $360,796
- Townhouse: -11.2 per cent to $170,900
- Apartment: -16.7 per cent to $89,833
The increased popularity of detached properties is in line with trends witnessed within markets nation-wide, as pandemic-related lockdown measures have left many homeowners craving more space, both indoors and outdoors.
New listings declined 16.5 per cent in December, while housing stocks also decreased 30.4 per cent year-over-year. The months of supply – the number of months it would take to sell current inventories at the present sales activity rate – advanced 27.2 per cent to 10.59.
Fort McMurray Before and During the Pandemic
In November, housing inventories in Fort McMurray plummeted to their lowest levels in 13 years. But can this local market slump be explained?
Winter can be quite frigid in Fort McMurray, and this can serve as a seasonal deterrent to local market activity. Traditionally, between November and March, the number of active buyers drops, therefore there are typically fewer listings and sales during this period.
But Ann-Marie Lurie, the chief economist for the Alberta Real Estate Association, thinks tepid housing stocks are a good trend for the city’s struggling housing market.
“That’s going to support some at least modest improvement for prices if that continues,” Lurie said in an interview with CBC News in November. “This market has struggled with too much supply relative to the demand for quite some time.”
Director with the Fort McMurray Real Estate Board, Andrew Weir, commented to CBC News that at current, these drops in inventory have helped balance the market, bringing home prices in line with other communities across Alberta, and making properties more affordable – and attractive – for potential homeowners. As both a resident and investor, Weir is hopeful for the future of the Fort McMurray market: “As somebody that pays very close attention to the market … when I look at the numbers they’re not telling me as scary a story as what a lot of homeowners would believe it is.”
Can Fort McMurray’s Real Estate Market Be Revived in 2021?
The oil and gas industry is critical to the lifeblood of the Fort McMurray economy; because of this reliance, the local real estate market closely mimics the highs and lows of the energy sector.
So now that the energy sector is on the rebound, with crude prices on an upward trajectory, could this resuscitate the Fort McMurray economy and real estate market in 2021?
Real estate spectators are keeping a close eye on developments within the energy sector over the next few months to form projections for Fort McMurray’s housing market. For now, Fort McMurray will remain a buyer’s market and continue to be one of the most affordable cities in the Canadian real estate sector; this is hopeful news for keen real estate investors and first time homebuyers who are struggling to tap into the skyrocketing property prices in other urban centers country-wide.