Latest data from the Albertan government showed that the number of foreclosures in the province has seen a significant 25 per cent annual increase in the past two years, with a total of 5,746 properties foreclosed (2,277 in Calgary) over the past year alone.
However, real estate lawyer Jeff Kahane noted that the current downturn is markedly different from the one that came right after the 2009 financial crisis, as foreclosures in the latter period were mainly driven by subprime loans gone wrong.
“The last one was a real-estate-driven market correction, whereas this one is a consequence of oil and gas,” he told CBC News.
Unemployment and underemployment are the central culprits in the current spike in foreclosure rates—accounting for as much as 90 per cent of foreclosure cases in Alberta, according to Tim Reid of Phoenix Real Estate Investing.
“They’re just a little bit over-leveraged and without that full income that they had prior, that’s where they fall behind on the payments,” Reid explained. “They’ve also got other debts, like their car payments, credit cards, things like this.”
Numbers from the Canadian Bankers Association indicated that as of February 2017, mortgage arrears in Alberta have reached a three-year high of 2,736 cases, representing 0.47 per cent of the province’s total mortgages.