Risk

Vancouver and Toronto were rated the most overheated housing markets in Canada in 2015. The prairie provinces, in contrast, have seen slight to significant declines in housing prices.
Does this make buying a home in Fort McMurray a high risk? Actually, the Canada Mortgage and Housing Corporation found that Regina and Winnipeg had the greatest risk. This is due to overvaluation and over-building in those communities relative to demand. In contrast, Calgary and Fort McMurray housing starts dropped off almost immediately as the price of oil started to fall, ensuring that new home supply declined along with demand.
What does this mean for the Fort McMurray real estate market? No one wants to buy a home at the peak of the housing market and face a guaranteed loss when they sell it. However, Fort McMurray’s real estate market is not overvalued, and barring a deep national recession that pulls all housing prices even lower, the risk of buying a house that you can’t recoup your investment on is low.

Valuation

Vancouver and Toronto are the two most over-valued markets in Canada in 2015. And that’s saying something when The Economist named Canada the most overvalued housing market in the world in the same year.
Vancouver’s market is driven up by international as well as domestic demand for limited stock. Toronto’s demand is driven by internal migration to the city, international migration to Canada by those who settle in Toronto and slow population growth. In both markets, there’s little room to build new single family housing outside of an insane commuting range. So builders build up while home buyers bid the existing housing stock up even higher. This has caused Vancouver and Toronto home prices to skyrocket far faster than the rate of inflation.
Alberta’s housing prices, in contrast, declined along with the price of oil. Calgary’s home prices dropped a few percentage points and will soon bottom out. This has done wonders for Calgary’s affordability, making it 1.4% more affordable than its historic norms in 2014 per the Desjardins Affordability Index.

Fort McMurray’s real estate market swings higher and falls lower than Calgary’s housing market. Fort McMurray has seen somewhat greater housing price declines than Calgary. This actually makes Fort McMurray real estate much more reasonably priced today, and properties on the Fort McMurray MLS can’t be considered over-valued.

Selection

Fort McMurray real estate has been built up slowly over several decades. The city has grown from a few thousand residents to around seventy five thousand permanent residents. The decline in oil field employment is partially offset by expansion at Fort Hills north of the city. The city’s real estate market has a saving grace in the form of its heavy reliance on migrant workers who flew in to work at the oil sands and return home when they no longer work The city can literally lose tens of thousands of migrant workers whose departure empties dorms owned by the energy sector giants, dampening demand for hotels in the meantime. The permanent resident population, however, isn’t leaving. The greatest impact of the drop in oil prices is the number of people who are listing homes for sale because they are thinking of moving in the next few years and put the homes on the Fort McMurray MLS as a precaution instead of waiting until they intend to move. Many would-be buyers are responding to the economic uncertainty by putting off a home purchase, literally staying put and on the sidelines as Fort McMurray real estate becomes much more affordable than it was five years ago.

The end result for the home buyers looking at the MLS for Fort McMurray is far greater selection at better prices than have been seen for years. And even if prices do start to inch up again, the reaction for many home buyers is to start snapping up bargains. The range of options available to Fort McMurray home shoppers are unlikely to be this good again for years.

Economics

The decline in oil prices since 2014 has had an impact on the Fort McMurray economy. The unemployment rate has gone up. However, Fort McMurray was a boom town in 2014, with incredibly high pay rates for typically low paying jobs in fast food and child care. Fort McMurray has seen modest wage drops, but this brings wages closer to reasonable pay rates. Employers who ran with skeleton crews due to the high cost of labor will likely hire more people as the cost of labor comes down, preventing unemployment levels from going too high.

If you have steady employment in Fort McMurray and a good down payment, this is a great time to buy a home. You can mitigate the risk of economic uncertainty affecting your home purchase by not becoming “house poor”. This means not buying a home that consumes a third of your income on insurance, taxes, heating and mortgage payment. A safer number is not spending more than a quarter of your take home pay on these expenses combined. You’ll be able to save more each month for your emergency fund and cover unexpected expenses without going into debt, which limits your available funds in the future. Taking this extra margin into account when shopping for a home ensures you don’t pay more than you can easily afford today and can still afford if your wages were reduced in the future.
And by buying a house in Fort McMurray at today’s very affordable prices, you’ll ensure significant gains when the real estate market improves later.