How Will Falling Oil Prices Impact Alberta's Real Estate Market ?

Reblogger Robert May
Real Estate Sales Representative with Robert W May - Lethbridge Real Estate

It is interesting to read these older posts which discuss what effects falling oil prices might have in the future.  Well the future is here........oil bottomed out and so did the economy.....

Original content by Larry Matthews NSREC#1739

How Will Falling Oil Prices Impact Alberta's Real Estate Market ?

Will I lose my job in Alberta

Will falling oil prices effect my job in Alberta

How will falling oil prices impact my job in Alberta

Fort McMurray Alberta

An aerial view of Fort McMurray,Alberta which has a population of roughly 77,000 up from just 2,500 in the late 1960s.

         I am being asked the above questions quite often lately. A lot of Nova Scotia's residents are working in Alberta or have a loved one working in Alberta. A decline in Alberta's prosperity due to falling oil prices could impact many Nova Scotian's or I should say many Eastern Canadians working or living in Alberta. Here are some of the things to consider depending on your own particular circumstances. 

           First question is my job secure ? A recent study done by Andrew Leach the Enbridge Professor of Energy Policy at the University of Alberta  and published in his Maclean's magazines article estimates that existing projects at current prices will see returns drop from 18% to 6% so projects started should still be completed. However at this rate of return at 6% margins are too slim to start new projects. That article was written the end of November 2014 when oil had fallen to around $70 per barrel. Of course oil is now down below $60 per barrel so that 6% is now less. Nonetheless we can assume your job is reasonably safe if working on an existing new project not so safe if your project is finishing up and your company is hoping for work on a new project. 
            The provincial government in Alberta will take about an estimated 7 billion dollar hit in lost revenue and the federal government about 5 billion. This will impact on government spending on infrastructure and thus road work, bridges and major government projects may be shelved. 
             New construction of new homes has already slowed in Fort McMurray so there will definitely be a decline in construction jobs and I would predict a decline in housing prices as the real estate market softens. 
              If you own a home in Alberta and are planning on moving back east in the next few years you may want to cash out now and sell your home just in case the housing market does crash. I've been in the real estate business long enough to remember the last housing crash in Alberta so don't think it can't happen. 
               Buying a home right now in Alberta might be a mistake simply because you may pay too much if there is a correction in the works. Only you can decide your tolerance for risk there. 
                In closing it is a good time to buy a home down east. Most area's in Nova Scotia are experiencing a buyers market with great prices for home buyers and lots of inventory to choose from. The falling price of fuel oil and gas will only stimulate our housing market as consumers have more disposable income and optimism increases demand for housing. 
                 So home sellers take heart. There just may be a light at the end of the tunnel as our real estate market could start to improve. When it comes to real estate buying, selling , appraising or financing we are here to help. Please do not hesitate to give us a call. 
                  All the best for 2015 and may you and your family be richly blessed in the coming year.
 
 Thanks
 
  Larry
 

How Will Falling Oil Prices Impact Alberta's Real Estate Market ?

Will I lose my job in Alberta

Will falling oil prices effect my job in Alberta

How will falling oil prices impact my job in Alberta

Larry Matthews is a recognized expert in Nova Scotia real estate. He is licensed as a real estate broker, real estate appraiser and mortgage broker. The Nova Scotia Legislature has passed a resolution recognizing Larry and his wife Peggy for the success of their company Hants Realty Limited. The Municipality of East Hants awarded Hants Realty Limited with a certificate of recognition for providing 25 yrs of quality service to the residents of East Hants. Larry is an author,photographer,artist and publisher. http://www.easthants.com  http://www.larrymatthews.com

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Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is a good reblog selection.

Have a very special weekend.

Jun 10, 2016 06:29 AM #1
Rainmaker
135,705
Nibal Elsaadi
SI Real Estate Tampa - Tampa, FL

Hello Robert.

 

I agree!  Given the current economic environment, it is no surprise that both consumer confidence and housing demand are impacted by falling oil prices, which has also affected Alberta’s Real Estate Market.  Great post!  

Jun 10, 2016 06:36 AM #2
Rainmaker
317,771
Larry Matthews
Hants Realty Limited - Halifax, NS
Larry Matthews DAC Broker and Appraiser

Hi Robert

                  Thanks for the re-blog. I don't think most Canadians realized how important Alberta's economy was to our whole country. I hope other provinces and their citizen's realize we have to get behind these pipe lines especially here on the east coast.

NATIONAL ENERGY BOARD

Despite being a major producer and exporter of crude oil, Canada also imports oil from abroad, largely into eastern Canada. This is largely because there has been little infrastructure connecting Western Canadian oil supplies to eastern Canadian markets.

Not only have crude oil imports decreased, but the source of imports is changing. In 2013, the U.S. displaced Algeria as the main source of Canadian crude oil imports. This has been driven by the growing availability of tight oil production from North Dakota, Texas, New Mexico and Colorado. Currently, crude from the U.S. is relatively less expensive compared to offshore crudes. As a result, imports from the U.S. increased sharply in the first eight months of 2014 and now represent nearly half of all crude oil imports into Canada.

Imagine the USA used to be the largest consumer of Canadian oil and now supplys us over half of our oil. Think of the jobs being lost. I think the largest market for Canadian oil is now Canada itself and we need to put aside provincial differences and get the infrastructure in place to support our own industry. Makes sense to me. Time to kick CAVE to the curb.

What's CAVE ??

Citizens

Againest

Virtually

Everything.

Jun 10, 2016 07:55 AM #3
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