Posts Tagged ‘alberta’
CBC’s Don Pittis reports about how Fort McMurray’s vulnerability to the boom-and-bust economy is an ancient Canadian pattern.
Hark Savinsky remembers the boom days when every kid out of high school could walk right into a good job. And the first thing each youngster did after getting that job — with a little help from the bank — was buy a shiny new truck.
Those days are gone. In fact, they’re long gone.
Because Savinsky, who now works at Scotiabank’s corporate headquarters in Toronto, grew up not in Fort McMurray, Alta., but in Atikokan, Ont. He watched the northern Ontario community boom, and when the mines closed one after the other, he witnessed its pain as the boom turned to bust.
Fort McMurray is going through the same difficult process experienced by communities dotted across Canada as the single industry they depended upon sinks following an exhilarating rise.
The wealth and sophistication of Fort McMurray is hard to compare with smaller boom towns, but one common feature is that the decline is often gradual, as enormous reservoirs of wealth seep out of the community. After many years of prosperity, residents cannot accept that the party is over.
“There was a lot of hope,” Savinsky says of Atikokan, which saw its population shrink from about 7,000 to just over 2,000. “And this is part of the denial, I suppose.”
First, the CBC:
The federal housing agency says there is a risk of correction in Canadian housing markets in several cities, especially Toronto, Saskatoon and Regina, because of overvaluation and overbuilding of real estate.
Canada Mortgage and Housing Corporation looks at housing markets in 15 Canadian cities every quarter, in an effort to detect housing bubbles.
Cities such as Calgary, Saskatoon, and Regina suffer from both overvaluation and overbuilding, as prices remain high and building continues in face of low oil prices.
The level of housing prices in these cities is not supported by the economic conditions, CMHC says. Prices remain high despite rising vacancies and falling demand for housing.
Alberta and Saskatchewan are facing weakening migration, employment, and income, which are in turn affecting housing markets, CMHC said in its report released Wednesday.
Overbuilding has worsened in Saskatoon and Regina, despite downward pressure on prices from weakened demand for housing, CMHC says.
Canadian Finance Minister Bill Morneau introduced a package of tighter home-lending rules in December, citing risks from a surge in prices in Toronto and Vancouver that leave some younger families at risk from outsized mortgages. Prices of single-family homes in those cities often exceed a million dollars and have sparked a surge in condo construction that has drawn warnings from the International Monetary Fund.
“In Toronto, overall strong evidence of problematic conditions reflects a combination of price acceleration and overvaluation,” the CMHC report said. “We are also monitoring for the potential emergence of overbuilding in Toronto due to the high number of condominium units under construction. Inventory management therefore continues to be necessary to make sure that these condominium units under construction do not remain unsold upon completion.”
The overvaluation rating for Montreal, Canada’s second-largest city, was lowered to moderate from strong.