FORT MCMURRAY — With major energy announcements, renewed talk of pipelines and growing interest in oilsands investment, signs of increased economic optimism are beginning to show up in Fort McMurray’s housing market.
Local real estate professional Colin Hartigan says rising prices, increased buyer activity and more people moving to the region for work suggest the market is entering a new upward cycle.
By the end of September, the average price of detached homes was up about three per cent from the start of the year, while inventory fell 22 per cent in September alone.
“A lot of that inventory supply that we had, oversupply really… has depleted almost down to nothing now,” Hartigan said.
“We’ve kind of chewed up that inventory, and now we’re starting to see that price increase follow.”
The shift is particularly visible in more affordable segments of the market.
Apartment prices were up 8.2 per cent, while townhouses and row houses were up 22 per cent compared with a three per cent increase for detached homes.
Hartigan said those figures suggest buyers are entering the lower rungs of the property market, while movement is also beginning to return among people looking to trade up into larger homes.
He added there is also a noticeable change in who is buying.
“The biggest trend of buyers we’re seeing is people moving into the market for jobs,” Hartigan said.
“There’s jobs again to be had, and prices are good.”
He said buyers relocating from Ontario and British Columbia are among those entering the Fort McMurray market.
The rental and investment sides of the market are also strengthening.
Hartigan said investors are returning as rental rates improve and incentives once needed to attract tenants disappear.
“Investors are back in the market because rental rates are strong,” he said.
“We are definitely seeing people that are recognizing an opportunity to get a good return on the investment and potentially good uptick on the price on that investment.”
Hartigan stopped short of describing the market as a new boom, but said the next upward cycle has begun.
“I won’t call it a boom yet, but the next cycle of an uptick is here for sure,” he said.
He said contractors are also seeing more activity locally, another indication of improving economic confidence.
Major new oilsands projects, however, would take longer to produce their full effect on housing demand.
Hartigan said historically, major project announcements can take one to three years before their impact is fully felt in Fort McMurray’s real estate market.
New construction also remains limited.
Hartigan said current home prices are still not high enough in many cases to make new construction economically attractive for builders, despite land being available for development.
He expects that to change if prices continue rising.
“We’re kind of in that interesting time, and I think you’re going to see this tightening of inventory for a period of time until prices start to come back up before you start to see that engine really rev up in the local market.”
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