The Alberta Real Estate Association and Alberta’s newly elected NDP government will work together to build affordable housing instead of imposing rent controls -- but the news isn’t sitting well with every agent.
“Any time the government starts getting involved, I get a little nervous because the market, I feel, will correct itself,” said Duane Ritter, a real estate agent with Re/Max in Edmonton.
“Vacancies are increasing and there is a strong amount of projects underway to increase supply, which in turn will force the price of rental units to drop so I think it’s necessary.
“In Edmonton alone we have five high-rise apartment buildings being built that will affect prices down the line. There are high times and there are low times.”
During the election campaign, the NDP alluded to implementing rent control measures, saying it made good sense to put resources into making more affordable units available.
However, Ritter says that projects already underway would take care of that.
“Older units will be cheaper once supply catches up with demand,” he said. “Everything changes so quick and at times and the government can be too slow to act.”
He compares the intervention to the crash in the 1980s, in some respects.
House prices fell by 31 per cent in Calgary and by 26 per cent in Edmonton between 1981 and 1985. What’s more, a controversial national energy program paralyzed the economy by setting oil at a "made-in-Canada price.”
Non-recourse mortgages, which often allow homeowners to walk away from their foreclosed homes as well as the outstanding debt, contributed to a spike in the default rate in the 1980s and drove prices down.
While Ritter doesn’t believe a similar scenario is in the works right now, he said it’s a chief example why government intervention doesn’t work in the housing market.
“The market always corrects itself,” he added.