Gerard Hagan, co-owner and agent at The Best Edmonton Real Estate Team, argues that Edmonton’s housing market is shaped by forces that set it apart from most North American cities. Unlike markets driven primarily by population growth or employment diversity, Edmonton’s real estate sector is closely tied to oil prices and the performance of the energy sector, resulting in pronounced boom-bust cycles that many investors underestimate.
“100% if oil is doing well, people are spending money,” Hagan says. He explains that when the energy sector is strong, Edmonton residents invest more in real estate. “People are putting money into real estate. They may buy homes, fix up what they have, do renovations, and those renovations may lead to selling or buying a second property to rent out,” he says.
Hagan describes the relationship between oil prices and real estate activity as both direct and immediate. When energy companies perform well, increased confidence and capital flow into the housing market. Homeowners undertake renovations and upgrades, investors look for properties to buy, renovate, and rent, and first-time buyers gain the financial means to enter the market. These effects compound, creating periods of rapid growth.
The Downside of Commodity Dependence
However, Hagan is quick to point out that the reverse is just as true. When oil prices fall, discretionary spending tightens, and real estate activity slows abruptly—not because of changes in housing fundamentals, but because diminished cash flow leaves households with less to spend.
“If oil is down and people have a hard time spending money, those things come into play,” Hagan notes. “As the energy sector does well, real estate does well. If the energy sector isn’t doing so well, then it affects real estate as well.”
This dynamic means that traditional housing metrics, such as inventory levels or pricing trends, often fail to capture the full picture in Edmonton. According to Hagan, broader economic conditions in the energy sector have a greater impact on housing demand than local supply and demand factors.
“Because our market is where we live, we are so dependent upon commodities and government, like oil and gas,” Hagan says. “One day, oil can be doing very well, and the market is strong. Then, within a few months, it’s not doing so well, and our market shifts.”
The Condo Market Collapse
This volatility has left a clear mark on Edmonton’s real estate landscape, particularly in the condo market. During a recent immigration surge, developers built large numbers of condos to keep up with rising demand. However, when energy sector conditions worsened, the market could not absorb the new supply.
“The condo market has really taken a big hit,” Hagan says. “At one point, condo prices were quite high. But because there was a big influx of people coming into Edmonton, a lot of condos were being built. Then the market slowed, and many of those condos lost a lot of their value.”
Hagan explains that condos purchased or built during peak periods saw significant declines in value as the pace of new arrivals dropped and construction continued. This situation highlights how Edmonton’s reliance on the energy sector can quickly lead to mismatches between construction and actual demand.
What This Means for Investors
Hagan believes that investors and homebuyers in Edmonton need to use a different analytical approach than those in more economically diverse markets. Understanding the interplay between commodity prices, government policy, and housing demand is just as important as evaluating specific properties or neighborhoods.
He advises that investors should monitor energy sector indicators, such as oil prices and government energy policy, as closely as they would track local housing inventory or price trends. In Edmonton’s market, these broader economic signals often provide more accurate forecasts of real estate performance than traditional metrics.
To address this reality, The Best Edmonton Real Estate Team positions itself as a consulting partner, helping clients understand how macroeconomic forces shape local real estate conditions. Hagan says his team spends significant time educating buyers and investors about the risks and opportunities created by Edmonton’s commodity-driven market.
Whether other cities with large energy sectors will adopt similar strategies depends on how widely the industry acknowledges that commodity-dependent markets require a fundamentally different approach to real estate analysis. For Edmonton, Hagan makes it clear: understanding oil prices is as essential as understanding square footage.
