How Low Have Prices Reached?
People keep asking us:
“How much have Fort McMurray home values fallen?”
They also ask:
That, and “Will home prices go up?”
We can’t answer the second question, but we can definitely answer the first one.
[January 2020 update! Check out the blog we just published called "Fort McMurray Real Estate to Rebound in 2020?"]
This isn’t an easy article to write at all.
So here is my warning: If you don’t want to know, don’t read on.
My role here is to provide facts and to avoid complicating it with emotion. So, I apologize if some of the analysis here seems cold; in our positions, we are acutely aware of the human consequences of this housing market correction, but that doesn’t mean it’s not important information to share.
If you own a property in Fort Mcmurray which you bought during the boom, it’s recommended that you check out our article called “When Will Fort McMurray Homeowners Be Able to Sell?” before reading this one. It’s a lot more cheerful!
If you are struggling with life’s challenges and need someone to talk to, you can call Some Other Solutions’ (SOS) 24-hour crisis line at 780-743-4357 (HELP) https://someothersolutions.ca/information-referral
The Story So Far
Oil prices peaked in June 2014 at USD106 (WTI).
In a 2017 post, we first explored, in detail, the theoretical effects of oil prices (as well as employment and interest rates) on Fort McMurray home prices. Also in 2017, we detailed an early history of the real estate crash. Since then, we’ve been keeping you up to date and this article is part of that.
Today’s article simply looks at how much home values have decreased since the boom.
Why does it matter? We have learned that an important first part of planning for the future is getting all the best information.
Why have we picked this year to write this article? Well here comes the good news:
At some point last year (we believe), the local housing market broadly reached a balanced situation. This means that we now have enough buyers buying (and few enough sellers listing) that prices have become more stable. Luxury homeowners are still under negative price pressure, but some townhomes, in contrast, have recently been changing hands for slightly more than they were in the depths of winter (specifically: 401 Athabasca).
2019 might not be the year prices start rising again, but then again, it might[efn_note]The interpretations of any MLS® data used are my own and don’t reflect the opinions of the Fort McMurray Real Estate Board or its members. There is plenty of my opinion here, but the data we are using is super accurate. I am not permitted to predict the future and this article does not attempt to do that.[/efn_note]. Whether or not this year is looked back on as a “turning point”, the stability we appear to be witnessing is, in our opinion, an important moment in our market’s history. 2014 and 2019 are good benchmark years, conveniently (for statistical purposes), 5 years apart.
Today, we’ll look at 6 different housing options[efn_note]We are not calculating benchmarks here, just looking at the evolution of values for broad categories of homes over time, where the age of the property is not anchored (there is depreciation).[/efn_note] so that we get a picture of how the economic depression has impacted different parts of the Fort Mac housing market. We’ll present a chart and a table for each[efn_note]In all of the charts and tables in this post, the source data covers only the following areas: Abasand, Beacon Hill, Dickinsfield, Downtown, Eagle Ridge, Grayling Terrace, Gregoire Park, Parsons North, Prairie Creek, Stonecreek, Thickwood, Timberlea, Waterways, and Wood Buffalo[/efn_note].
For consistency, we’re going to restrict the dataset to homes built between 2000 and 2013.
I do want to be very clear though: This kind of analysis is very rough so shouldn’t be relied on for planning. If you would like an estimate of value for your own home, we can take care of that for you (just reach out to us).
Here are the different housing categories we’ll look at today:
1.) 2-Bedroom Apartments
2.) Townhomes
3.)
Mobile Homes with Land
4.)
Duplexes
5.) Entry-Level Single Family Homes
6.) Large Homes with Suites
Let’s get into it…
2-Bedroom Apartments | -$168,071 | -44%[efn_note]Percentage decreases and average dollar losses are calculated by using data from the tables. These tables present mean sale prices, whereas the charts show the median sale prices (monthly ticks).[/efn_note]
Chart 1: Monthly Median Selling of Prices of 2-Bedroom Apartments
Built 2000-2013 over the period 2014 to April 2019
Table: Average Selling Prices of 2-Bedroom Apartments
in Fort McMurray, Built 2000-2013
Townhomes | -$246,635 | -49%
Chart 2: Monthly Median Selling Prices of Townhomes
Built 2000-2013 over the period 2014 to April 2019
Chart 2: Monthly Median Selling Prices of Townhomes
Built 2000-2013 over the period 2014 to April 2019
Mobile Homes with Land | -$188,979 | -41%
Chart 3: Monthly Median Selling Prices of Mobile Homes with Land
Built 2000-2013 over the period 2014 to April 2019
Table: Average Selling Prices of Mobile Homes
in Fort McMurray, Built 2000-2013
Duplexes | -$151,171 | -23%
Chart 4: Monthly Median Selling Prices of Half Duplexes
Built 2000-2013 over the period 2014 to April 2019
Table: Average Selling Prices of Duplexes
in Fort McMurray Built 2000-2013
Entry-Level Homes | -$226,842 | -33%
Additional Criteria: Max size: 1,500sqft above ground. 3 or 4 bedrooms.
Chart 5: Monthly Median Selling Prices of Entry-Level Homes
Built 2000-2013 over the period 2014 to April 2019
Table: Average Selling Prices of Entry-Level Homes
in Fort McMurray, Built 2000-2013
Large Homes with Suites | -$291,962 | -31%
Additional Criteria: Min size: 1,800sqft above ground. Legal Suite.
Chart 3: Monthly Median Selling Prices of Large Homes with Suites
Built 2000-2013 over the period 2014 to April 2019
Table: Average Selling Prices of Large Homes with Suites
in Fort McMurray, Built 2000-2013
Three Cautionary Notes
Firstly, this analysis only looks at newer homes (for consistency). If we were to study older homes, we would likely not see such steep price declines because older properties (in dollar terms) tend to depreciate slower. In a follow-up post, we’ll do the same analysis for older homes. This blog has been long enough. We do know from our anecdotal experience, however, that most older, non-luxury, single-family homes and duplexes have changed the value in the region of about -20% to -30%.
Secondly, please note that in this study, we’re not comparing apples to apples when it comes to the time periods studied. For example, we are looking at Jan-April 2019 versus the whole of 2014. At the end of this year, we will update this article to remove this negative bias (homes tend to sell for more in summer than winter). Also sampling over only a four-month period does not give us a high degree of certainty, so updated information at the end of the year will improve the accuracy of the statistics.
Thirdly, an article like this should not be used as a basis for personal planning - it’s just meant to give a general sense of the size of the correction for the various housing types. We’re here if you’d like accurate information on your home and honest advice on the best course of action for you and your family.
Conclusion
Home values have fallen significantly, but the economy is improving.
If you check the tables and charts, in the cases of many housing options, you can see that values have been more-or-less holding since last year.
January 2020 Update: We now know how the rest of 2019 played out and have seen a real change in the market since November 2019. Be sure to get the latest information in our January 2020 post called:
"Fort McMurray Real Estate to Rebound in 2020?"
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If you are struggling with life’s challenges and need someone to talk to, you can call Some Other Solutions’ (SOS) 24-hour crisis line at 780-743-4357 (HELP) https://someothersolutions.ca/information-referral