As a Fort McMurray Realtor and home owner, when I turned on the morning news of December 11, 2015, I was immediately concerned with the news of an increased down payment required to purchase a home in Canada. It seems the Government was attacking Alberta and Fort McMurray yet again. Following a Majority win for NDP in Alberta and a new Liberal Federal government for Canada and then their talk of more taxes and higher royalties for Oil companies and so much uncertainty on policies. Not to mention the 63,000 job losses in 2015. Have they forgotten how much this community and our oil sands has brought to our entire nation. After so many years of prosperity and growth in our wonderful community it seems as though it’s now time for Fort McMurray to have tough times and I envision the rest of the country saying “it’s about time they suffered a little”. How quickly it’s forgotten one of the main reasons our country has been so prosperous these past years was in no small part to Oil sands development and the hard working people of this city. The Export of Energy and Oil is Canada’s #1 industry worth 130 billion a year, far ahead of the #2 Industry which is Auto at $60 billion. The Energy sector is the back bone to our economy. Kevin O’Leary a Toronto business man recently said “Alberta is the Heart Beat of our Country”. Alberta and the Energy Sector has proven that employing not only local Fort McMurrayite’s but Canadians coast to coast.
2015 also seen a US President looking to leave a legacy before the impeding change of President in 2016. Mr. Obama decides to kybosh the Keystone XL Pipeline, which seemed to be our last hope for creating more jobs in Canada in the energy sector in 2015. Now the lawsuit launched against the US Government by Trans Canada Pipeline for 15 billion USD. This law suit gives us hope that the next President elect will have no choice but to move forward with the Keystone XL Pipeline because the government has breached the North American Free Trade Agreement. What’s even more interesting is the same Obama Administration that has rejected the Keystone Xl pipeline has no problem supporting a new oil pipeline in Africa. Along with leaving a legacy, some may feel that our friendly neighbor is not so friendly anymore.
This is my 13th year as a Realtor and 20th as a member of this community. This is a cycle that we have seen before but feels as though it has hit harder. In 2008 we seen home prices go down and then recover again through 2009-2013. There are always ups and downs… Eventually oil prices will go up and we will feel our heads above water again. The question is when. Kevin O’Leary is willing to invest one million dollars in the energy sector if Rachel Notley steps down, which is encouraging. We need an action plan from the Government, both Provincial and Federal.
The most amazing part about all of this downturn is that a community said to be a “Ghost town” in Media, Fort McMurray has managed to stay strong and we have seen more giving then we ever have. Our United way has raised 6.8 million, the Northern Lights Hospital and Keyano Foundations are still seeing huge donation numbers at their events, along with that, our Community has raised over $600,000 to help save the life of a local Firefighter with his fight Against Cancer. I would say 2015 did not even dim the light of Fort McMurray!! I’m so proud to call this place home.
2015 has come and gone and yes Alberta has suffered and Fort McMurray has felt it. We have seen changes in our Real Estate market in 2015 with dropping house prices on average 6% and our sales down 44% overall in the Regional Municipality of Wood Buffalo & Lac La Biche for 2015. What is more interesting about these numbers is we had 421 Less homes for sale in 2015 than we did in 2014 and 411 less compared to 2013. We also ended 2015 with a Higher average home price at $726,265.00 compared to 2014 $714,088 which was a 1.71% growth in December.
Throughout the year our least volatile price point was between $500,000 and $749,900. Our most volatile is over that $750,000 mark and upward. On the positive side we did see homes sell in 2015… in fact we SOLD 1,032. Yes, our numbers were down in Real Estate but in speaking with the community it was not only Real Estate that was down, but also the traffic at restaurants and local retail businesses. Every industry locally has felt the crunch. With fewer house starts in 2015 and very little in 2016 we will see things tighten up even more with Supply. This is a definite positive for the Resale Market locally. So I’m being optimistic about the year ahead in Real Estate here in Fort McMurray.
2016 has brought a new challenge for those wanting to purchase a home in Canada over the price of $500,000. Those wishing to purchase $500,000 and below the 5% down payment will be maintained. The change is for those purchasing over $500,000. Buyers will have to come up with 10% down on the portion over $500,000. For Example, is you are purchasing a home at the value of $700,000 you will now require $45,000.00 down payment. So the total percentage down payment would be 6.4% . To break it down …….
Home Purchase Price: $700,000.00
$500,000 @ 5% down = $25,000.00
$200,000.00 @ 10% down= $20,000.00.
Total Down payment: $45,000.00
The total down payment increase is $10,000.00 under new rules as of February 15, 2016
Here is a link to a great down payment calculator using new mortgage rules
Recently during open houses, I have been discussing the mortgage changes with locals there seems to be a misconception in what the new changes are. Most are thinking they are required to put 10% down on the total purchase price over $500,000.00. I hope that this information helps bring some clarity to it, as that it is not the case. This change will come into effect February 15, 2016. So you will also need to have a full approval in place on a purchase of a home by February 14, 2016 and the Closing date/ Possession date of the home must be on or before July 1st, 2016.
From today till February 14th, 2016 you can purchase a home up to a purchase price of $999,999 with only 5% down (based on a preapproval).
I have been asked, do I think these changes are going to affect the Fort McMurray market? I reply Yes, I do but I don’t think they will have a huge effect on it.
In my experience from selling several homes over $500,000, typically most buyers are putting down more than 5% already. I think 2016 is going to be a continuation of 2015 “slow and steady”. PRICE WILL DICTATE THE OUTCOME OF A SALE OR NOT. If the price is right; the buyers are willing to take the risk should the market dip down anymore. Unfortunately, we are not in a market anymore where the seller dictates what they want for the property, we are now on the side of a Buyer’s market and buyers get to dictate what they are willing to pay for a home. Sellers are having to be very strategic about pricing and staying ahead of the market not lagging behind it. As an Active and Full time agent I have the skill, knowledge and experience to help guide sellers through this as well as helping buyers make a smart selection in the purchase of the biggest investment of their lives. To all you buyers out there that are sitting on the fence I will leave you with this quote from one of the Wealthiest people in the World, Warren Buffet.
“Be fearful when others are greedy. Be Greedy when others are fearful, It’s that Simple”
Coldwell Banker Fort McMurray
Facebook: Lisa Hartigan
Disclosure: This is from the Opinion of Lisa Hartigan a Realtor in the Province of Alberta not the opinion of the Fort McMurray real Estate Board or its Members.