Over the last 15 years, the economy in Alberta has gone from really good to really bad in what some consider ‘the blink of an eye’. We have watched families and companies fold under the pressure causing distress all across the province. While some wonder how it all happened, it’s all rather simple and happened just like any other boom experienced in history. It started when industries began expanding rapidly increasing the demand for workers which in turn increased wages. This allowed many who were once considered blue-collar families to experience the sudden wealth and it almost sent everyone into a frenzy.
Of course with the higher wages, brought the feeling of everyone wanting bigger and better things. This meant buying brand new cars, jewellery and clothes; as well as lavish vacations and huge, extravagant parties but it didn’t just stop there. After a while not only were people trying to spend the money they made but they were starting to spend it before the hours were even worked and everyone knows that living beyond your means is never a smart thing to do.
Meanwhile the increased demand for workers impacted the housing market the most. Companies were recruiting workers from not only all over the country but worldwide. This created a real estate boom like no other due to the demand for housing for all the new residents. Homes that were normally listed on MLS Calgary and MLS Edmonton for $300,000 were now almost double, if not more.
Then all of a sudden, when no one expected it, the markets started to fall into a recession and work began to slow down. That’s when the age old saying never rang more true; what goes up, must also come down. For most workers hours were reduce, wages were either cut or frozen and some were even laid off. Families started to lose their homes to foreclosure and faced being on the streets. This is when the new trend began…
The foreclosure era was upon us and soon both the Calgary foreclosure rate and the Edmonton foreclosure rate hit at an all-time high. While in some cases foreclosures can mean lower house prices, because the banks typically want to sell fast to recoup as much of their money as possible rather than hanging on to it to get a few dollars more. This was not initially the case in Alberta. Due to the extremely high prices the houses were bought for, mortgages were high and that meant the loans banks had given were also high. With the flood of foreclosure properties banks faced increased real estate portfolios and greater liability. They were unwilling to list for low prices because their overall loss on the numerous properties they had would be too great to be worth it.
However, things have started to stabilize and take a turn for the better. So even though this was another blow to an already struggling market, just like any other challenge faced, it will be overcome and people will start to emerge from the trenches to a brighter future!
Of course with the higher wages, brought the feeling of everyone wanting bigger and better things. This meant buying brand new cars, jewellery and clothes; as well as lavish vacations and huge, extravagant parties but it didn’t just stop there. After a while not only were people trying to spend the money they made but they were starting to spend it before the hours were even worked and everyone knows that living beyond your means is never a smart thing to do.
Meanwhile the increased demand for workers impacted the housing market the most. Companies were recruiting workers from not only all over the country but worldwide. This created a real estate boom like no other due to the demand for housing for all the new residents. Homes that were normally listed on MLS Calgary and MLS Edmonton for $300,000 were now almost double, if not more.
Then all of a sudden, when no one expected it, the markets started to fall into a recession and work began to slow down. That’s when the age old saying never rang more true; what goes up, must also come down. For most workers hours were reduce, wages were either cut or frozen and some were even laid off. Families started to lose their homes to foreclosure and faced being on the streets. This is when the new trend began…
The foreclosure era was upon us and soon both the Calgary foreclosure rate and the Edmonton foreclosure rate hit at an all-time high. While in some cases foreclosures can mean lower house prices, because the banks typically want to sell fast to recoup as much of their money as possible rather than hanging on to it to get a few dollars more. This was not initially the case in Alberta. Due to the extremely high prices the houses were bought for, mortgages were high and that meant the loans banks had given were also high. With the flood of foreclosure properties banks faced increased real estate portfolios and greater liability. They were unwilling to list for low prices because their overall loss on the numerous properties they had would be too great to be worth it.
However, things have started to stabilize and take a turn for the better. So even though this was another blow to an already struggling market, just like any other challenge faced, it will be overcome and people will start to emerge from the trenches to a brighter future!
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