The number of homes changing hands in the province plunged 44 percent in December and January, the most for the two-month period since 1988 when the Canadian Real Estate Association began tracking the data. Royal Bank of Canada, the nation’s second-largest lender, lowered its forecast this month and now sees sales of existing homes in the province sliding 16 percent this year. Toronto-Dominion Bank, the largest bank, said sales in the province would drop 31 percent this year and forecasts a 5.1 percent average price cut.
As the housing market declines, demand is rising for rental properties, according to Mainstreet Equity Corp. Alberta was the fastest growing province for rental revenue in the quarter ended Dec. 31, according to the Calgary-based property manager.
Average vacancy on the company’s units in Alberta declined to 5.8 percent in the quarter from 7.6 percent in the year-ago period, and rent jumped 10 percent to $1,022 per month. Mainstreet has about 60 percent of its properties in Calgary and Edmonton, according to financial documents.
“We’ve seen this show before,” said Ted Zaharko, a real estate broker who’s been in business for more than four decades. “Albertans are a hearty bunch and we’ll get through this again.”
He said this downturn won’t be as severe as the one in the 1980s, when the oil services industry suffered from both a global recession and oil price decline. At the time, energy companies folded and unemployment jumped to 11 percent, while mortgage rates of more than 15 percent made homes unaffordable.
Today, those rates are at record lows after the Bank of Canada cut its lending rate to 0.75 percent this year, with the country’s six largest lenders also reducing borrowing costs.
“It’s a little bit like driving through a snowstorm,” said Soloway of Home Capital. “You don’t expect it to be permanent, but it’s going to be around for a while and you just slow down and drive carefully.”
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