TORONTO – Royal LePage says home sales in the spring real estate market will be the first indication of how lower oil prices have affected home sales in Western Canada.
Chief executive Phil Soper told the Economic Club of Canada on Wednesday that job losses in the oil patch could lead to a “significant and extended downturn” in Alberta’s real estate sector.
In January, Canada’s largest oil sands company, Suncor Energy Inc. (TSX:SU), announced plans to lay off 1,000 workers as it grapples with the dramatic decline in crude prices.
Shell Canada has said it will trim the 3,000-person staff at its Albian Sands mining operation by less than 10 per cent while Canadian Natural Resources Ltd. (TSX:CNQ) has frozen hiring.
A Royal Bank report issued on Monday predicted that sales of existing homes will decline by 16 per cent in Alberta and nine per cent in Saskatchewan in 2015.
But Soper says the recent shortage of homes in parts of Alberta has created pent-up demand among buyers, which will mitigate some of the risks to the region’s real estate market.
Simeon Papailias, a real estate investor, says two of the oil patch executives who rents condos from him in Alberta have recently handed in their move-out notices after being laid off.
Papailias, who has been in the market for 15 years, says he expects to see some of his properties in Western Canada remain vacant as layoffs continue.
However, he says he is used to the energy sector’s economy cycle.
“I’m ready to weather a small storm,” said Papailias, who also serves as a partner at the Real Estate Centre at Royal LePage Signature Realty.
Soper says it won’t be until spring, the peak real estate season, when the full impact of the job losses on Alberta’s real estate sector will be felt.
“I think we need to see the market go into spring and see if there are people that are confident enough in their jobs that they’re going to take advantage of a little break in the market to actually buy a home,” Soper said.