Oil got hammered today but that's only supposed to affect cities like Leduc, Fort McMurray and Calgary. Home prices in Texas are rising as people move there yet no one moves to Alberta. Toronto, Vancouver and Edmonton are the same none of them produce any oil.Posted by Tony on Thursday, March 5th, 2020 at 11:04pm
Tony, I agree. The UCP will likely start hiring more government workers and spend more on capital to boost the economy in Edmonton to make their job numbers seem better. I think we will see some large increases in house prices later this year with mortgage rates plunging. A client of mine just locked in for 1.99% for a five year fixed mortgage.Posted by Tom on Friday, March 6th, 2020 at 12:42am
Calgary's market is done though. Most oil companies are looking at a further 20% reduction in staff levels later this year. Edmonton won't be impacted thoughPosted by Tom on Friday, March 6th, 2020 at 12:44am
Government will collect less tax when oil price goes down, so it will have less money to spend. Private sectors seems getting better now.Posted by Sharon on Friday, March 6th, 2020 at 2:32am
Edmonton most certainly will be affected by the sharp drop in energy prices. People who work in the oil and gas sector in Nisku, Ft McMurray, etc., many of them come to Edmonton to spend their money including purchasing real estate. If people in the oil and gas sector are laid off, then they won't be spending money. I can't say exactly what the effect will be on Edmonton's economy but it will definitely have some effect on Edmonton. Depends on how much lower energy prices go and how long prices stay down.Posted by DK on Friday, March 6th, 2020 at 5:47am
Sharon, I agree. Electric cars will become the standard within 5 to 10 years. The world is very quickly moving away from oil. Alberta will have a shell of an industry in five years, and it'll be a niche industry in Alberta due to its high cost, and high pollution, in 10 years time.Posted by Tom on Friday, March 6th, 2020 at 10:55pm
GM, Trudeau bought this province a pipeline when no one else would build it. Do not speak poorly of him. He's the only reason Alberta isn't Detroit.Posted by Tom on Friday, March 6th, 2020 at 10:57pm
The problem of oil was too expensive, too many wars, the economy will eventually shift away from it. Electric car could becomes a new norm sooner than predicted. Alberta should switch to power generation economy.Posted by Sharon on Saturday, March 7th, 2020 at 4:56am
Just curious, what do mean by "power generation economy"? Where is this power coming from ?Posted by Karlhungus on Saturday, March 7th, 2020 at 5:52am
I'm sure Turdeau isn't done with Alberta. He's got the province where he wants it - on its knees, almost out for the count. He just needs one or two more blows to the head and he'll kill it completely. Then it will be "mission accomplished".Posted by GM on Saturday, March 7th, 2020 at 6:02am
Do you mind shearing the bank giving 1.99 interest rate ? I am planing to buy a house in Calgary. Thanks for your help.
West Texas intermediate crude to open down another 10 dollars U.S. tomorrow. Thirty dollar oil will be remembered as the boom day era. Monday is tomorrow.
Russia is the culprit the same country that got Trump elected in 2016.
Of course if you hang around a bunch of environmentalists in a university setting they will all agree oil needs to be shut down. Their (so they think) livelyhood doesn't depend on it. Try the same discussion around oil executives or anyone trying to feed their family in Alberta.
As for your Tesla, I love electric cars, especially Tesla's and would love to own one. But your anecdotal story about your car has no bearing on the facts of the real world. Where not only is it very difficult for an average joe in Canada to own one, all the people in China and India who are moving into lower middle class from poverty will put a huge demand on cheap gas vehicles. And we're talking billions of people.
The pipeline would have been completed by Kinder Morgan years ago if Turdeau hadn't interfered. All environmental assessments were completed and approved. The pipeline was approved by the federal government. Then Turdeau showed up and interrupted the whole process. He made such a mess of it that Kinder Morgan gave up on it. I guess you don't remember that part.
Then the fool spent $4 billion taxpayer dollars to try to make it look like he was salvaging it. All the while his plan was to never allow it to be completed.
I'll speak poorly of him because he's the absolute worst Prime Minister Canada has ever had.
It is very dangerous when a group of supposed elites(who consider themselves to have the prevailing opinion even though they have no idea of what is really going on in the world because of their closed mindedness), decide they are going to shut down the Alberta oil sands. I wonder if at that meeting in Hawaii, the people there discussed that Under President Obama, the USA built close to 10,000 km of pipelines and began to export large amounts of crude oil. The USA now rivals Saudi Arabia and Russia for oil production. And France uses nuclear energy to derive 80 % of their electricity needs. I don’t have a problem with any of these actions taken by the USA or France to secure their energy independence. But I do have a problem with the deliberate misinformation and hypocrisy of the people who are trying to close down the Alberta oilsands.Posted by DK on Saturday, March 7th, 2020 at 11:44pm
GM. I disagree. People in Alberta don't like him because of his father. But Trudeau is quite popular outside of Alberta/Saskatchewan. It boggles my mind that oil is still relied upon to balance the budget and create jobs in Alberta, when its use in internal combustion engine cars is being phased out in many countries. We need to transition to a knowledge-based economy here in Alberta. I actually did my PhD thesis on this and it got rave reviews in academia.
It looks like oil could hit the $20s according to this article due to the moves by Saudi Arabia this weekend. If oil stays that low for any length of time, there are few hedges this year for oil companies, so I think you'll see half of all oil companies in Alberta facing bankruptcies due to cash flow issues.
Interesting that you did your PHD on the topic yet have a misunderstanding of whats happening in the world. Not sure where this narrative of the world moving away from oil comes from when demand continues to increase each and every year. statista.com/statistics/271823/daily-global-crude-oil-demand-since-2006/
The fact that you think electric cars will be the standard within 5-10 years is laughable. 2% of vehicles are electric. Yes, eventually that will go up but it will take far longer then 5-10 years.
Time for some facts on crude oil. World crude oil consumption has been increasing over the past many years and is forecast to increase over the next 10 years. Oil demand is expected to flatten out in the 2030’s. This is according to the International Energy Agency. So crude oil is not going anywhere. It is always a good idea to diversify and it would be a good idea for Alberta to do so as well. But talk of the energy sector in Alberta disappearing is simply foolish and misleading.
The current collapse in the crude oil market is a result of the Corona Virus and bullying by Saudi Arabia and Russia. However this is just a temporary situation. Unfortunately some smaller energy companies in Canada and the USA may go bankrupt. But this price destruction will not last long because no one can survive these lower prices. Russia, Saudi Arabia, Nigeria, Libya, Iran, Iraq, all need higher prices because they need money to finance wars that they are currently involved in. And Saudi Arabia needs higher crude prices to prop up its new IPO Aramco. So this is just short term pain for long term gain for the major oil producers including Alberta.
Karlhungus, I can tell you've never driven an electric car. I have a 2019 Tesla S, and when it was in the shop they gave me a Mercedes S class as a loaner. All the buttons were confusing, and the internal combustion engine was unresponsive and loud. I think that we're closer than people are realizing to electric cars being the norm.Posted by Tom on Sunday, March 8th, 2020 at 6:42am
DK, we'll see. I consider myself and my friends group environmentalists. I'm in the academic field at an Edmonton university, and the prevailing opinion is that Alberta needs to stop producing oil ASAP. I was at a sociology conference in Hawaii last year, and the speaker who was from Paris, in a talk about the environment, mentioned Alberta by name as one of the jurisdictions that many international environmental groups are targeting to ensure that dirty oil is shut down.Posted by Tom on Sunday, March 8th, 2020 at 6:46am
OH, Hi there,
I guess for me I would be concerned about a provincial budget based on a $58.00 a barrel price, when it currently sits at $32.00 a barrel.
"The Alberta government is budgeting for benchmark WTI crude to average US$58 a barrel for the new budget year that begins in April. Every $1-a-barrel drop in the average price over the entire year costs the treasury $355 million in lost revenue." -Edmonton journal
Kenney has already gone on record saying that the UCP budget is at risk of going off the rails due to the Covid crisis and combined with the collapse in oil prices, the failure of an already questionable budget plan is a high probability.
Just some observations/opinions:
- the uni professor who went to Hawaii - the plane used fuel. Planes (like lots of other machinery/transport aren't going electric
- electric cars in a few years aren't going to be as expensive as Tesla today. All manufacturers have or are working on producing electric cars. These companies know how to make mass production cheap cars. They will be the norm sooner than you think.
- house prices (IMO) aren't going North for at least 2 years. Don't rush into a purchase.
- interest rates have about 1 maybe 2 more drops then the Fed is out of ammunition and it is up to the gov't to stimulate the economy.
- toilet paper consumption will normalise
But really, what will this drop in oil, crash in US treasuries and global financial chaos do to the housing market in Edmonton? Am I waiting for deflation in prices or what?Posted by Jared on Monday, March 9th, 2020 at 12:51am
Oil price goes down this much after only a small percentage of oil demand slashed, that's how unstable the oil industry is right now. Oil companies probably will like to keep more oil underground at this moment. It's not easy for Alberta in short term.Posted by Sharon on Monday, March 9th, 2020 at 1:27am
I'm with Jared, should I hold off until the fall to purchase my home??? can we see a decrease in price coming???Posted by Melanie on Monday, March 9th, 2020 at 6:58am
The most important thing is your personal financial situation and your housing needs.
With regard to the stock market affecting the housing market, I found a good explanation (although American) on this site and have included a portion below.
“The link between equities and housing is really quite modest,” says Matthew Gardner, Chief Economist with Windermere Real Estate.
“But, that said, when the stock market rises, we feel wealthier and can be persuaded to spend more money on housing. However; they are also very different. In as much as many people review their portfolios very regularly, it is almost redundant to do the same thing with our homes. Housing is shelter first, and an investment second.”
Gardner’s point is also true in reverse.
“The housing market can have an impact on the stock market,” Gardner notes. “In rare situations when housing values decline, we are less likely to invest in equities.”
As Gardner points out, the main impact that a strong stock market has on the housing market these days is that buyers with strong stock portfolios have more money to spend on housing—which could theoretically influence a rise in home prices.
“Any short-term correction to stocks has little, if any, impact on housing markets,” explains Gardner. “However, any systemic contraction in equities can impact housing.”
So, when the stock market remains a strong bull market for an extended period, it may exert a positive influence on the housing market. If the stock market turned into a bear market for any significant length of time, the slow-moving housing market could also cool.
My thoughts: the housing market is impacted more by the local economy, jobs, mortgage rates, vacancy rates and the supply and demand of housing than the stock market, although they are all related. There is generally a lag between an influence like the employment rate and housing prices - if we saw the job market increase drastically today, we likely wouldn't see housing prices rise because of jobs for 6 months or so. Sales are also a leading indicator of pricing, and we've seen demand (sales) increase and supply decrease (year over year) for the past 10 months. Mortgage rates are currently very low and should create an increase in activity for the short term.
We'll be fine in Edmonton. The UCP is going to do stimulus spending, which will likely increase the number and pay for public sector workers here.Posted by Tom on Tuesday, March 10th, 2020 at 4:54am
Business can create a lots of more jobs than government. That's what UCP called sustainable jobsPosted by Sharon on Thursday, March 12th, 2020 at 4:48am
I think UCP more likely won't do what NDP tell them to do.Posted by Sharon on Thursday, March 12th, 2020 at 4:55am
No, we NEED a sales tax to fix our fiscal crisis. Not lower revenue. My God.Posted by Tom on Thursday, March 12th, 2020 at 7:01am
UCP could cut tax faster to keep business stay longer in Alberta.Posted by Sharon on Thursday, March 12th, 2020 at 7:09am
Any house you buy now is a great price compared to what it was a few years ago.
Plus... you should have gotten a fantastic interest rate on your mortgage.
I just removed conditions on a home purchase 4 weeks ago ...... gotta love this timing ... House will be worth less then i paid for it before i even take possession this spring ...Posted by Nick on Friday, March 13th, 2020 at 1:02am
Nick. I wouldn't worry it will recover when oil goes back up.Posted by Tom on Friday, March 13th, 2020 at 1:32am
Nothing lasts forever , including the recession that is going to hit Alberta .
Just frustrating as my family waited a long time to purchase , and made an offer over winter to try and get the best deal ....
Ultimately i never looked at it as an investment , just a home for my family . Bought well below what we could afford so it is what it is....
Like my wife said .... If your not upset about losing $100k+ on our family Motorhome , why be so fussed about our house ...
Although St.Albert assessing the home at almost double market value to get more taxes is bullshit !!