The province of Alberta is struggling when it comes to real estate sales. The Canada Mortgage and Housing Corporation reported that listings alone were down by 11% for the period from January 1 to July 31. This comparison is to the first seven months of 2015, which incidentally saw a drop of 21% when compared to the same period in 2014.
Alberta’s woes continue – lower sales of existing homes also mean that the construction of new homes has taken a hit. Only 12,590 house construction projects were started in August 2016 – this is a massive 40% decrease from the figure for the same month last year. Alberta’s economy is heavily dependent on oil and gas (it is Canada’s largest producer), and falling oil prices have taken their toll. This is part of a nationwide trend – Canada is the fourth-largest oil exporter in the world – and provincial spending has simply been insufficient to absorb the shock. The Canadian Real Estate Association estimates that national home sales declined 3.1% in August 2016, the fourth month in a row that sales were down.
The real estate, renting and leasing sector makes up the largest component of Canada’s economy. But this is largely a commission-based industry and relies on buyers/lessees who have the money to make purchases or rent out residential, commercial and office space. The worldwide slump in crude oil prices has affected manufacturers who make the second-largest contributions to Canada’s economy, so there are lesser buyers/renters for commercial space. Oil and gas producers come in third, but they are the most affected – energy companies are either downsizing and moving into smaller offices or going out of business, unable to pay for the costs of production.
Amidst all the gloom, Edmonton bucks the curve. The number of days a home takes to sell in the Edmonton census metropolitan area is still 55, the same as it was a year ago. Prices have dropped by about 0.8%, but this is hardly worth mentioning, as such minor decreases would still be present in any major growth cycle. This can be attributed to Edmonton’s lesser dependence on oil and gas, unlike a lot of other cities.