Calgary on tenterhooks as oil prices slide lower

by Olivia D'Orazio10 Dec 2014
Oil prices could drop to $43 a barrel, bringing the housing market in key oil-producing regions like Calgary with it, but industry players say that future is not yet on the horizon.

“We’re seeing some stability in the market,” says Mark Evernden, an associate with Engel & Völkers in Calgary. “Personally, [the market] is quite busy, both in home values and the higher-end homes. There is some uncertainty in the market, however, the economy and the migration is still high and the low interest rates are still supporting some of the sales in the marketplace.”

U.S. investment bank Morgan Stanley predicted the continuing slide in oil prices -- WTI crude dipped below $62 a barrel Wednesday morning -- and while financial advisors aren’t worried, the government in Calgary is already reacting. David Brown, a broker in Calgary, says he expects governmental budgets to be adjusted to prepare for the potential impact.

Still, Brown said the move is a preventative one.

“I haven’t seen any effect on [the housing market] yet,” he says. “I doubt we’ll see anything from now until the end of the year.”

Oil companies, too, are working to mitigate the risks that low oil prices have on other markets. Namely, many companies are stifling production in an effort to boost oil prices, which would have a knock-on effect for the housing market.

“The economy within Alberta is still quite strong, Evernden says. “There are still a lot of people here, the economy is very stable. The oil prices won’t stay down. We’re seeing some settling in volume because of that uncertainty, but I’m not seeing any slowdown within listings or in sales.”
 

COMMENTS

  • by Scott Simmons 12/10/2014 1:49:08 PM

    I had the pleasure of living in Calgary for 12 years and living the roller coaster of oil and gas price fluctuations. My observation was the oil and gas companies tend to react fast and swift. It was not unusual to see big layoffs at the big companies sweep the city. The big problem this time out is the massive provincial spending and accumulated debt. It looks like the premier of the day does not have the gusto of Ralph. My guess is there will be no massive deep cuts to the provincial spending instead there will be tax increases. At a time of a down turn in the oil market, any tax increases could evaporate the Alberta advantage, if there is actually such a thing anymore. How many Albertan's will say it's time to move on? BC with our various property tax rates schemes (homeowners grant, seniors grant, tax deferment program, farm status) and low property prices (Vancouver Island and smaller Gulf islands) might be looking good. On one day about a week ago I had 37 different people (different ips address) from Edmonton on my web reading so many different pages. I checked and it was -20 in Edmonton. The key is not to be the last one out the door. You want to hit this trend at the leading edge not the tail end. Tail end charlie is going to have a hard time selling and a hard time buying in a market that is really just stating to heat up. Cheers on Sunny Salt Spring Scott Simmons.

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