On the Up! An Update on YMM's Housing Market
It’s hard to hang around a coffee shop or a party in this town and not hear about one of two things: jobs and real estate. The same may be said across Canada, but I’m not sure there’s as much of a focus on those two sectors as there is here in Fort McMurray. The region is famous for the first, and perhaps infamous for the second.
Since the bottom began falling out of oil late in 2014, it’s been a rough ride for homeowners in the Regional Municipality of Wood Buffalo, but it seems that just like with the local job market, there’s optimism in the air when it comes to real estate.
The first indicator that things are starting to turn around is that more homes are being sold, and quicker than they were over the past few years. In its latest market report for February, the Fort McMurray Realtors reported 83 homes sold through the first two months of 2018, that’s up from just 56 in 2017.
“Without any question we’re seeing that buyers are actually buying, they’re active now,” says Bruce Ferguson, Director with the Fort McMurray Real Estate Board. “That is attributed, I think in a lot of cases to that confidence we need to see in a market. What we’re seeing is homes that have been on the market in some cases close to a year, they’re receiving offers and they’re being accepted and they’re moving off the market. These are certainly positive indicators to a market recovering.”
After the price of oil tanked, the local housing market followed suit. The average sale price of a single family home in November of 2014 was $777,396, by April 2016 it had cratered to $591,942 (just two months after a WTI price just below $30USD per barrel). Now that oil has begun to stabilize, holding steady above $60USD per barrel in 2018, the average sale price of a home in February was $611,483. It’s a long way from the highs of 2014, but it’s a slow return to what many hope is a more stable market.
Not only is pricing beginning a slow recovery, but the selling process has become less arduous with homes on the market for shorter durations, fewer low ball offers and some homes even seeing bidding wars, something that hasn’t happened in nearly two years.
“Current market conditions have made a slight shift towards a sellers’ market in the single family home category, as we are experiencing decreased number of listings coming on the market and what appears to be an increased buyer appetite,” says Katie Ekroth, President, FMREB. “I believe that the current number of sales happening in the marketplace is an indication of confidence returning in the market place, overall, we as a region have had some time to adapt to what I call our new normal and with that adapting comes confidence.”
Another positive sign? Realtors are once again starting to see clients moving to Fort McMurray from other centres like Calgary and Edmonton as oilsands operations and contractors have gone from cutting staff to hiring sprees.
While the prices of attached housing units and condominiums are lagging behind in terms of price recovery, there’s been a large drop off in the number of active listings which is another good sign. In February, 2018 there were 32 duplexes on the market, down from 45 in 2017 and 65 in December of 2015.
While the market slowly starts to correct itself there are a few things sellers can do to make the process easier and maximize their return and potentially limit the amount of time the home is on the market.
“It’s all about dressing your house for success, and that’s a term that we use quite often in real estate. Very often a seller will think ‘My home needs what I feel is $30,000 in renovations, so I’ll price it $30,000 lower than maybe what the market might bear’ and very often that doesn’t translate into a successful experience,” says Ferguson. “Buyers often don’t have that foresight sometimes to recognize that a $30,000 renovation will get them that house that they actually want. Reason being because down the street or a block over there may be a home with that renovation complete and ready to go so it’s all about pricing, we’re still very much in a price-sensitive market.”
Meanwhile buyers should be taking advantage of near historical low mortgage rates, as the Canadian economy continues to heat up that’s bound to change, if you’re going to buy, now’s the time before prices start to rise further and inventory levels shrink.
The question on the tip of everyone’s tongue is ‘what’s next?’, unfortunately there’s no crystal ball especially for a market as vulnerable to external forces like ours in the RMWB. Everything from the price of oil, market access, and of course the political climate at the Municipal, Provincial, and Federal levels can all in varying ways impact buyer confidence in the region.
“We live and die by that price of oil, but we have some real key challenges when looking at the provincial and federal level with this pipeline activity. We need to get pipeline activity going because our producers are the ones that pay the wages and right now they’re being restricted, not by technological advancements, not by knowing where their reserves, but by their ability to put oil to market and that is very critical right now,” says Ferguson. “So within six months I think we’re going to see some more announcements I believe with our pipeline capacity increasing and I think that’s going to really help in terms of price recovery and even the population of our community getting to that population we had in the first quarter of 2016.”
Anyone who has been in this town for a long time will tell you that Fort McMurray has seen these swings before, just like with oil it’s not the first time and likely not the last time. The market has always been able to weather the storm.
“The pendulum always tends to swing too far to the good or too far to the bad and I think we’ve swung too far to the bad and we’re coming into what we might consider a more balanced and realistic marketplace,” said Ferguson.
It’s certainly not happening quick enough for homeowners in this market, but all signs are pointing to a slow return to a healthier market for both buyers and sellers alike. With additional oilsands projects on the horizon like the recently approved Suncor Lewis SAGD operation about 25 kilometres north of the city and the next super project proposed by Tecks Resources which would employ about 7,000 during construction and another 2,500 permanent jobs during operation once built.
In the meantime homes are selling faster, the price difference between list prices and sale prices is shrinking, there’s less inventory on the market and more units are being sold per month all signs that point towards a recovery in the market.