Alberta’s economy is heavily influenced by its natural resource sector, with energy exports—particularly oil and natural gas—playing a critical role in the province's financial health. Recently, the province has seen a rise in energy exports, thanks to increased demand and higher global prices for crude oil and natural gas. While this surge has had wide-reaching implications for Alberta’s economy, one sector that has felt a noticeable impact is real estate. Specifically, the rising energy exports have created ripple effects in Alberta's housing market, pushing property prices up, especially in cities like Calgary and Edmonton.
Energy Exports Surge
As of 2024, Alberta’s energy exports have surged, driven by both external market demand and a favorable geopolitical climate that has boosted Canada’s standing as a reliable energy supplier. According to the Alberta Energy Regulator, the province’s oil exports reached 3.8 million barrels per day in 2023, with natural gas exports also experiencing a significant rise. This upturn is closely tied to Canada’s increased exports to the United States and other international markets.
In 2024, rising global energy prices, spurred by supply constraints and geopolitical tensions, have pushed the demand for Alberta's oil and gas even further. The energy sector’s boom has caused a surge in provincial revenues, benefiting sectors like employment, infrastructure, and notably, the housing market.
The Link Between Energy Exports and Real Estate
Alberta’s real estate market, particularly in its urban hubs like Calgary and Edmonton, has a unique relationship with the province's energy sector. Historically, Alberta’s housing market tends to follow the performance of its energy exports. When energy prices rise, it often leads to increased employment, higher wages, and stronger economic confidence—factors that drive housing demand.
A 2024 report from the Calgary Real Estate Board (CREB) noted that home sales in Calgary increased by 5.9% in the third quarter of 2024 compared to the same period the previous year, while average home prices rose by 4.3%. This increase coincided with a period of rising energy exports and revenue growth in the province. Similarly, in Edmonton, the real estate market saw a 4.5% year-over-year price increase, with suburban areas experiencing even stronger demand due to increased job opportunities in the energy sector.
Employment and Wage Growth
The growth in energy exports has led to a rise in job opportunities in Alberta’s energy sector. According to the Alberta Labour Market Information, the province’s unemployment rate dropped to 5.5% in the third quarter of 2024, down from 6.3% earlier in the year, thanks largely to hiring in the oil and gas industry.
Higher employment in the energy sector has led to an uptick in wage growth, with average weekly earnings in Alberta rising by 3.1% compared to 2023, as reported by Statistics Canada. These rising wages have contributed to stronger purchasing power among Alberta residents, allowing more families and individuals to enter the housing market or upgrade to larger homes.
Real Estate Supply Constraints
While energy-driven demand for housing has surged, Alberta has faced some challenges in meeting this growing demand, particularly in Calgary and Edmonton. A lack of available housing inventory, coupled with increasing development costs, has slowed the pace of new home construction. In the first half of 2024, housing starts in Alberta’s largest cities were up only 2.8%, lagging behind the spike in demand created by the energy boom.
This imbalance between supply and demand has created upward pressure on home prices, particularly in sought-after suburban areas near energy sector job sites. The Calgary Real Estate Board reported that inventory levels in Calgary’s housing market were down 14% compared to a year earlier, while sales remained robust, further tightening the market and pushing up prices.
Rate Cuts and Housing Affordability
Another key factor influencing Alberta's real estate market in 2024 is the recent monetary policy shift. The Bank of Canada, as of the latest reports, has cut interest rates four times this year, bringing the benchmark rate down to 3.75%. These cuts were intended to stimulate the economy and ease borrowing conditions for consumers. As mortgage rates have decreased in response to the central bank’s actions, more buyers have been able to afford homes, adding to the growing demand.
However, while lower borrowing costs have made it easier for potential homebuyers to enter the market, they have also contributed to price inflation by increasing purchasing power in a market where supply remains constrained. The combination of rising energy-driven demand and favorable lending conditions has created a perfect storm for higher home prices across Alberta.
Long-Term Implications for Alberta’s Housing Market
Looking ahead, the continued rise in energy exports, coupled with ongoing interest rate cuts, could keep Alberta’s housing market in an upward trajectory. The energy sector is projected to remain strong through 2025, barring significant shifts in global oil prices or demand. This strength will likely bolster Alberta’s economy and keep housing demand elevated, particularly in urban areas where energy sector jobs are concentrated.
However, the lack of sufficient housing supply to meet this demand could pose challenges in terms of affordability. As prices rise, middle-income families may find it harder to afford homes, particularly in desirable areas of Calgary and Edmonton. This could lead to increased demand for rental properties and more intense competition in the rental market.
Conclusion
Rising energy exports are playing a significant role in shaping Alberta’s real estate market in 2024. With higher employment, wage growth, and demand for housing, particularly in urban centers like Calgary and Edmonton, real estate prices have been steadily increasing. While recent interest rate cuts have made mortgages more accessible, supply shortages have contributed to rising home prices, making it a challenging market for buyers. As Alberta’s energy sector continues to grow, it will be crucial for policymakers to address housing supply issues to ensure long-term market stability and affordability.
This intersection of energy exports and housing demand underscores the importance of understanding how external economic factors, such as the global energy market, can have far-reaching effects on local real estate trends. Alberta’s housing market is a reflection of its economic reliance on energy, and any significant changes in this sector will undoubtedly influence the future of real estate in the province.
Sources:
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
