Oil Town Feels the Pinch
While the oil extracted from Alberta's tar sands gets distributed, by train and pipeline, to the far reaches of the continent, much of the profits end up in Calgary. Formerly most famous for its rodeo, Calgary has been the financial headquarters for the decade-long petroleum boom taking place in the Athabasca Oil Sands some 300 miles north of the city. As workers have flooded into Calgary, real estate prices have risen accordingly in the city of 1.2 million. And tastes have changed, as modest homes have given way to McMansions.
But, in an industry town, the fate of the city is tied to the fate of the industry. With the crash in oil prices, banks that serve the industry have seen their stock prices crash. Banks are considered more vulnerable than the oil companies themselves. In January, Calgary's inventory of available housing doubled from the previous January, as home sales fell 39 percent and new listings rose 37 percent. Listing prices have remained steady for the time being. Home prices rose 8.8 percent in 2014.
"The Calgary real-estate market’s health will depend on how long oil prices remain depressed and how low they go. With oil prices down more than 50% from midsummer highs last year and few signs of an imminent rebound, the Calgary housing market is expected to stay depressed for the remainder of the year."