Why Haven’t House Prices Plummeted?
Saturday, August 20th, 2016
As Alberta’s economy continues to sputter, with unemployment hitting levels we haven’t seen since the early eighties, one would expect our once heated real estate market to be cooling off big time. Listings are way up over last year as people look to downsize, leading to an abundance of selection from which buyers can choose. A surface reading would suggest prices should be dropping.
But they’re not. Calgary’s average prices for July and August were actually up year over year, with only a 15 percent increase in the average number of days properties are listed on the market.
So why would that be? Late last month the CBC ran an excellent article exploring this very issue. Based on information from the Department of Finance, the conclusion the article reaches is that much of the unemployment our province is experiencing has hit itinerant workers – meaning those who came from other provinces to fill jobs in Alberta – who weren’t homeowners here, and have since returned to their home provinces. This has the effect of limiting downward pressure on Alberta’s housing markets (while spiking the rental vacancy rates). Read the article for more in depth analysis.
If the economic downturn continues, of course, its impact on the real estate market could be more pronounced. For the moment, however, housing sales remain a relatively stable component of Alberta’s economy.
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