The Fort McMurray MLS is brimming with options right now, and this year is an excellent time to get a deal on Fort McMurray real estate. Did you know that the selection of Fort McMurray homes is at a recent high, while the prices of homes for sale in Forth Murray are a bargain?
Let’s look at the overall trends in Fort McMurray real estate and the factors driving them.
Fort McMurray’s population has grown steadily over the past fifty years. The city has grown from a trading post and rail stop to town with around ten thousand people in 1970. Its population took off when oil prices skyrocketed in the 1970s, approaching 40,000 people in 1980.When oil prices fell in the 1980s, Fort McMurray’s population stabilized and grew slowly. When oil prices skyrocketed after 2000, Fort McMurray’s population grew from around 40,000 to almost 70,000 permanent residents in 2010. Before oil prices dropped by more than two thirds since 2013, Fort McMurray’s population was expected to hit 200,000 or more in the coming decades. If the oil industry slows down dramatically, Fort McMurray’s population will probably stabilize at its current level and remain there, not drop off dramatically. And if oil prices recover, causing many to come to work temporarily and some to settle permanently, population growth will resume its upward trajectory. Rapid expansion of the population, though, is unlikely because new oil sands projects require a price of at least $70 a barrel to be profitable.
The Energy Industry
The oil sands industry has been one of the major engines of the Fort McMurray economy for decades. Both Fort McMurray and Calgary suffered mightily when the oil boom went bust in the 1980s. Calgary did a better job of diversifying its economy to add more education, manufacturing, service and retail jobs so that a much smaller percentage of its workforce was out in the (oil) field. Fort McMurray remains heavily dependant on the oil sands and resource extraction industry for jobs. On the plus side, oil sands projects are built with forty year business plans behind them, so the energy sector won’t shut down these massive projects overnight. Lower oil prices may stimulate demand, preventing them from dropping and staying below the break even price for the oil sands crude. High gas prices cause Fort McMurray to boom.
Fort McMurray may be the center of the oil sands boom and bust, but oil isn’t the only energy extraction industry here. For example, the Fort Hills bitumen mine an hour north of Fort McMurray is still expanding. That mine could employ over two thousand people when fully operational. And it is certainly easier for Fort McMurray residents to fly in and out of that work site from the international airport in town than those from the coasts. This won’t offset all oil sands jobs lost, but it makes a big difference in local employment numbers.
Why is Fort McMurray’s real estate market relatively stable? Let’s look at the impact of migrant workers on the local housing market in greater detail.
The decline in the price of oil has led to a dramatic drop in the number of temporary workers. Several years ago, there were up to 40,000 temporary workers who alternated between the oil sands and home, often far away from Fort McMurray. Their trips back and forth kept Fort McMurray’s international airport humming.
One of the benefits of relying on such a large migratory workforce is that they return home when they are no longer needed. While their unemployment hurts them personally, Fort McMurray’s real estate market isn’t cratering because nearly a third of the local workforce is unemployed. As of this writing, unemployment in Fort McMurray is below ten percent. While this unemployment rate is higher than its average rate for the past few years, it is only a little higher than Canada’s unemployment rate. Historically, Alberta’s unemployment rate has been lower than Canada’s national unemployment rate, so the higher unemployment figures seems worse due to the significant growth in unemployment as oil prices declined. Yet these numbers would have been far higher had the oil sands not relied on so many temporary workers.
The decline in oil sands employment has emptied worker dorms and weakened demand for the hotels, without causing the Fort McMurray real estate market to similarly collapse.
Fort McMurray is trying to capitalize on its top notch airport, large hospitality industry, trade show facilities, boreal forests and museums to fill in the gap left by the declining transient workforce.
Fort McMurray for a while earned the highest annual household income of any location in Canada – $191,507. The high demand for labor led to extremely high pay in the energy sector, but it also led to fast food workers earning $15 to $18 an hour. Child care workers were paid $12 to $20 an hour in 2014.
These very high wages average boosted Fort McMurray home prices. The loss of many energy industry jobs has caused local wages to drop. Yet this can reduce the impact of the job losses. Parents who paid foreign nannies to watch their children because they worked shifts in the oil fields will now pay local childcare providers. Fast food restaurants that operated with skeleton crews due to the high price of labor can now hire more people to improve their level of service. As wages fall, demand for local labor goes up, and the job market will stabilize. A side benefit of the shift to more local employment as wages fall is that people who work in Fort McMurray aren’t sending their pay checks overseas or to family in other provinces. This will benefit the local economy, preventing it from dropping even more as wages decline. Housing prices will fall, as well, to meet the price levels the market can support.
The end result of this shift is a decline in Fort McMurray home prices to much more reasonable levels, as the housing market adapts to the lower average wage. Conversely, this means nearly all Fort McMurray MLS listings today are much more affordable than properties listed a year ago. If you’re in the market to buy a Fort McMurray home, you have your pick of homes at bargain prices.