July 21, 2016
Rebuilding Fort McMurray: Anticipated Housing Market Response Post Fire
The recent wildfires in Fort McMurray have caused significant property damage. Close to 10 per cent of all structures were destroyed. Experience from previous natural disasters gives us an idea of how the fires will affect Fort McMurray’s housing market in the short term.
Spike in Housing Starts
New residential construction in Fort McMurray has been declining since 2014 but the need for reconstruction will change that. If the building of every destroyed home’s replacement is started in one year, we could see a record number of new starts and rebuilding activity for the city. However, many homes won’t start construction until 2017 due to the time required for cleanup and remediation.
Decrease in Vacancy Rates
In the meantime, displaced residents and construction workers will seek temporary rental accommodation. Vacancy rates in Fort McMurray’s purpose built rental markets are expected to decline from their 29 per cent mark of October 2015 as a result. This will help stabilize rents.
Uncertainty Regarding Housing Prices
Additional buyers and reduced inventory may provide support to lift prices. However, low oil prices could continue to hamper price growth. On balance, it’s too soon to tell how home prices will be affected.
Read the Full Report — Housing Market Insight, Fort McMurray (PDF)