Oil seeps into every area of Alberta's economy. The residential real estate market is no different. According to the Alberta Real Estate Association (AREA), a sluggish oil industry, more stringent mortgage qualifications, escalating interest rates, all played a part last year in falling sales, especially in places like Fort McMurray and Lloydminster. In fact, sales were down about 18 per cent below a 10-year average in most south-central areas of the province last year.
It seems buyers have the upper hand in the Cow Town real estate market. When it comes to the luxury sale of residential real estate in Alberta -- particularly Calgary -- the economic downturn has put a damper on sales of more upscale homes. Add to that other factors like tighter federal mortgage regulations and heightened interest rates, which are barriers to homebuying.
In what otherwise has been a pretty bleak economic climate in Alberta, there have been some glimmers of hope. Real estate transactions in some sectors such as investments in the commercial and industrial areas, have provided the business-minded in Alberta with some light at the end of a dark tunnel. And the commercial sector just continues to gain momentum in urban areas like Edmonton and Calgary.
The resale home market in Calgary was hard hit in 2018. Residential real estate sales dropped but so did prices. In fact, Cow Town was one of the hardest hit Alberta city's when it came to resale properties last year. The Calgary Real Estate Board (CREB) said home sales were more than 14 per cent lower in 2018 than they were in 2017. Sales in December were even worse with a 21 per cent drop from the same time in 2017.
The real estate market will continue to have its challenges in the coming year. Real estate transactions in Canada have been affected not only by higher interest rates, but also be the additional mortgage stress test that potential purchasers have had to, and will continue to have to, pass moving into 2019. The Canadian Real Estate Association (CREA) says the tighter rules brought the market down to earth this year.