Alberta Canada Oilfield Layoffs affect on real estate prices?

Question

Roy N. · Answer

Account Closed

It will all depend on the long term path of oil prices and how much additional stimulus (read handouts) are given by the AB and federal governments {though they have perhaps learned their lessons in that area}.

The real estate market was/is extremely frothy and over valued.  There will be lots of folks left underwater as prices retreat, but I'm not sure on the opportunity for an outside investor.  If you look back to what happened to Fort Mac and similar "instance cities" back in the 80's during the big slow down you could be looking at a very long hold  on a speculative purchase. When there tar sands are not booming, there is a much smaller demand for housing - let alone commercial real estate - in those communities - few are going to live in Fort McMurry for the climate.

Northern Labrador is going though a similar spell due to falling commodity prices and shuttering of mines.

Dale Plant · Answer

I was reading through this old post and thought I would give an update. Can't believe its been three years.

There is mixed pressure on the market as a whole here now. Loss of Jobs applying the expected downwards pressure while the destruction of over 2400 structures by the fire in 2016 has resulted in a building boom that will continue into the rest of this year.

Almost half of my workforce never returned after the fire when the entire city was evacuated. Prices except for a few exceptions where someone was selling below market because they "were getting out of Dodge" and moving back to the Maritimes. There is a running joke that its almost impossible to find someone who was born in Fort Mac. This is actually true as most people are from somewhere else.

I still pay $1500 for a lot no bigger than 30' BY 100' in a trailer park. To buy would be $210,000 same as it was three years ago.

Jay Hinrichs · Answer

@Roy N.

I went to for Mac and when I did I could buy a 4 bed for 150k the rooms rented for 700 at the time.. I did make an offer on 10 acres of land for a commercial development and got out bid by CA super stores... It was summer the sun was shinning it was fun

got the locals tour of the tar sands operations pretty amazing stuff.

I wonder whats happening in Frack ing North Dakota.

there was a bunch of guys selling hotel rooms to unsuspecting Aussies 3 years ago promising 45% returns.. of course the Aussies not knowing any better jumped on board. I have gotten e mails from a few that got wiped out.. they properties were never build as the demand went down and the promotors are long gone and they are sitting in AU wondering what to do.. which I politely tell them there is nothing you can do.. you were thinking big score with no thought to down side.

Also on one of your Posts to Brandon you talked about Notaries US folks by and large have no clue what a notary is in another country.. Notary here can be gotten by anyone taking a simple test and small bond... IN your country they are trained like attorneys. And just as prestigious.

Roy N. · Answer

@Dale Plant

The last time around, it took 3-4 years before the tumbleweeds rolled in and price returned to the planet.

Another thing to keep in mind is much of the {camp} housing is not permanent, but trailers and semi-permanent accommodations.  Outside of their ability to produce revenue during the craze of a boom, none of these assets have any enduring value.

Dale Plant · Answer

I am currently Working in Fort McMurray and can tell you that we have experienced crazy pricing in real estate. Land is made available sporadically by the municipality creating mini building booms. It costs $1000/month to rent a room in a mobile home. You can buy a lot in a trailer park for $450,000 plus or rent for $1500 plus.

That was of course until the oil price drop. Some rents are easing, but rentals and pricing are remaining high. I think this is due to people having a wait and see approach for now anyway. It really depends how long this goes on for. There are no bargains yet so there are no buyers and the owners will try to recoup as much as they can.

If this goes on the downward pressure on pricing will increase. I think it would take a combination of things to happen before this becomes a buy town.

1. The seller become motivated, for example looses job and needs to move back East.

2. There are signs of rebound and investors see favorable price points to move in.

Either way the window will be narrow and with high risk