Most people arriving in Fort McMurray are looking for jobs; looking for the opportunity to pocket some of the financial benefits of working in the oilsands capital of the world.
But a recent look-see by a couple of big names had more to do with what was going on there than it had about money. The first- and third-ranked richest men in the world recently came to this northern Alberta city, mostly out of curiosity.
A source for Warren Buffett, chairman of Berkshire Hathaway Inc., and Bill Gates, co-founder of Microsoft Corp., says the duo came to McMurray to "satisfy their own curiosity," but also with "investment in mind." Both men have recently said they favour investing in Canadian oilsands because it offers a secure supply of oil to the United States.
The quick-hit visit may have given the men an overview of the industry, but may not have been enough time to get the full tour of the city, or to find out the downside of the multi-billion-dollar oil play, such as the lack of housing -- a major issue facing the largest municipality in the Wood Buffalo regional district -- coupled with continued expansion of population growth as workers far and wide arrive looking for their share of the oilsands pie.
"Oilsands development continues to be the main economic drive in Wood Buffalo," says Richard Corriveau, Prairie region economist for Canada Mortgage and Housing Corp. "Current production is full speed ahead, with more than $107 billion worth of projects either being proposed, under construction or completed."
Expansion of the region's oilsands region has led to more employment opportunities and as of the end of May, there were an additional 4,900 jobs compared to a year earlier -- and all of them are full-time positions.
Since 1999, the average annual population growth in the municipality has been nine per cent, says Dennis Peck, general manager of planning and development for the Regional Municipality of Wood Buffalo.
"But when you include the addition of new work camps, the rate of growth was 16 per cent in 2007 alone," he adds.
The 2007 municipal census put the regional population at 89,167, with more than 65,00o of whom living in Fort McMurray.
There are the obvious strains that growth has put on infrastructure, but regardless, housing demand remains high as all economic indicators continue to surge ahead, says Corriveau.
In addition, there is also a certain level of pentup demand for housing as serviced land was at a minimum.
"Was" is the key word. A decided lack of land is the major reason single-family construction will drop by nearly 21 per cent this year and why multi-family work will fall 39 per cent, according to CMHC figures.
Now, the region has annexed and serviced two parcels of land -- Parcels D and F -- and combined that with more land in the Timberline area of the city they will contribute over 5,000 housing units in the coming years. In addition, the province earlier announced plans to develop 1,600 hectares of land in Saline Creek Plateau and Parsons Creek.
Peck estimates together, these developments will be able to house 55,000 people at buildout, with 40,000 of them living in Saline Creek Plateau and Parsons Creek.
So with new construction on Parcels D and F, CMHC expects single-detached starts to increase and relieve some of the pent-up demand. This year, single-family starts will total 750 units. Despite the decline, 750 starts is still above the five-year starts average. In 2009, detached starts are expected to rise by 13 per cent to 850 units.
On the multi-family side, starts produced a record year in 2007, with the majority of units being sold as apartment condominiums.
Another 750 multiple-unit starts are forecast for 2008, as prices for single-detached units continue to climb. There will be more emphasis on multi-family construction in 2009 as buyers react to higher prices in both the resale and single-detached sectors. Starts are expected to reach 925, up 23 per cent over 2008.
For the seventh consecutive year, MLS sales reached a new record, with 2,373 in 2007.
"As we move further into the forecast period, sales are expected to ease off of record activity as the average MLS price climbs higher and buyers look to new homes over resale homes," says Corriveau.
This year, CMHC forecasts sales to fall by one per cent to 2,350. Another drop of two per cent is expected in 2009, which will bring year-end sales to 2,300.
Selling prices, though, will go up. Following growth of nearly 24 per cent in 2007, the average resale price is still expected to climb but to a lesser degree over the forecast period due to a decline in sales activity and an increase in active listings.
This year, the average price is forecast to increase by 17 per cent to $540,000, then in 2009 the average price is expected to reach $585,000, an eight per cent increase.
Despite slower price growth over the forecast period, Wood Buffalo will continue to have the highest average resale price out of the seven largest centres in Alberta.
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