How is Alberta’s Oil Slump Impacting Kelowna Luxury Real Estate?

Alberta

Calgary Alberta’s wealthy could be tempted to make the move to Kelowna – increasing demand and prices in an already tight market of multi-million dollar Kelowna properties.

 

It’s been two years now since Canada’s oil crash began. While Calgary’s housing market has suffered in the wake of Alberta’s recession Toronto and Vancouver are seeing soaring prices. So, what does that mean for the luxury real estate Kelowna sellers are about to list? 


What’s happening to real estate in BC and Ontario

A recent study, shows in the 1st quarter of 2016, real estate in Greater Vancouver & Toronto (GTA) will continue to lead in home price appreciation.

Desperate sellers in Alberta’s oil capital are dropping prices while the Greater Vancouver and GTA markets are skewed in favor of the seller. With a shortage of inventory and growing demand  in these areas, this is putting upward pressure on prices.

As one Globe and Mail article on the bruised Alberta real estate market states, “Falling home prices in Alberta come even as Canada’s housing market recorded a strong year in 2015, with overall home prices rising 6.9 percent, driven by soaring prices in Toronto and Vancouver.”

How do the 2016 Q1 numbers stack up for these two cities?

  • The GTA sustained its aggregate year-over-year home price increase of about 8 percent
  • Greater Vancouver market saw a 21.6 percent aggregate year-over-year home price increase for the region.


Why it’s happening and what that means for luxury real estate

The Great Migration from Alberta

In addition to a dropping dollar & low interest rates, last year saw nearly 40,000 jobs lost in the oil patch. In this January Maclean’s article about life in Canada with oil at $20/barrel (in 2008 it was $145 US/barrel), it’s easy to draw a connection between the layoffs (with more forecasted to come) and real estate, even luxury real estate.

“That is having a knock-on effect across the province in real estate, auto sales, and other business activity. The province has seen its unemployment rate jump from 4.4 percent in October to seven percent last month (December).”

Newly unemployed executives and oil field workers alike are fleeing Alberta for opportunities in Ontario and BC. Further fueling housing demand and price appreciation in the Greater Vancouver and the GTA.

While that out-migration is expected to have a more immediate impact on properties under $1 million, the economy will impact the luxury real estate market too, and not just in Vancouver, but its little sister, Kelowna, as well. 

Calgary’s wealthy were considering buying a second vacation home or a primary home in the Okanagan. They are saying good-bye to Alberta for good, tempted to take the turn as opportunity to move. That is likely to increase demand and prices in an already tight market of multi-million dollar Kelowna properties.

 

Is now the time to list your luxury property? Are you ready to discover your dream home in the Okanagan? Trust RE/MAX Kelowna’s top luxury real estate agents. Call 1-250-863-8810.