Impact of the 2020 Oil Shock and COVID-19 on Calgary Real Estate

By: Anshul Ruparell, Properly CEO

The last few weeks have been nerve-racking for Calgary homeowners and the world at large. An oil shock, a global pandemic, and an already challenged market environment have combined to create growing uncertainty for home buyers and sellers.

Properly’s experienced team of data analysts and real estate experts conducted a deep dive into the impacts of historical oil shocks and economic downturns on the housing market. While we can’t predict what will happen in the future, we hope to provide perspective on patterns observed in the past.

Our research generated the following insights:

1) In the twelve months following the 2014 oil price shock, the areas of Calgary with the greatest share of workers employed in the oil and gas industry (West, City Centre, and North West) experienced steep declines in sales volumes (30% decline). House prices in these areas decreased more slowly than sales volumes (2.7% decline), but the decline was ten times higher than the rest of Calgary (0.3% decline over the next year)

2) Zooming out to the global level, in past epidemics such as the 1918 influenza or the 2003 SARS outbreaks, economic activity and real estate sales volumes fell sharply during the epidemic period, but swiftly recovered in the period following the epidemic.

3) A drop in sales volumes and related real estate activity (e.g. showings, open houses) is currently underway in Calgary. We expect the severity of the impact on house prices will depend on how long the lockdown and social distancing period extends, and the depth of the resulting recession.

Oil Price Shock: What happened to Calgary real estate during the recent 2014 Oil Shock?

An oil town at heart, Calgary’s share of employment in the oil and gas industry is more than seven times the national average in Canada. These are only direct jobs – many other indirect jobs are highly dependent on the oil and gas industry.

The last time Calgary experienced a rapid oil price shock was in 2014 when prices fell from a 2014 high of $104 USD per barrel in June to $47 USD by January 2015. The most recent March 2020 price shock caused prices to plummet by over 50% to the lowest level in almost two decades, reaching a low of $22 USD per barrel on March 18th.

For historical context, here is what happened to real estate sales volumes and house prices in Calgary during the 2014 oil shock:

Impact on sales volumes: Calgary real estate sales volumes declined 26% during the last oil shock, from 25,500 sales in 2014 to 18,800 in 2015.

Impact on home prices: Relative to the impact on real estate sales activity, the decline in oil prices had a more muted effect on home prices; prices declined 2.7% in the hardest-hit zones of Calgary and 0.3% in the rest of Calgary

Properly research found that the areas of Calgary with a higher concentration of employment within the oil and gas industry experienced a larger negative impact on the local housing market – both in terms of the decline in home prices and in real estate sales volumes.

Which areas of Calgary were hit hardest?

Properly research found that the areas of Calgary with a higher concentration of employment within the oil and gas industry experienced a larger negative impact on the local housing market – both in terms of the decline in home prices and in real estate sales volumes.

The areas with the highest concentration of workers in the oil and gas industry are the West, City Centre and North West zones of Calgary. For comparison, 11.8% of workers in the West work in the industry, vs. 3.0% in the North East. Per the 2016 census, these zones average 9.4% of the labour force employed in the oil and gas industry, compared to 5.3% in the rest of the city.

Interested in tracking the value of your home during these events? Sign up for a free ProperPrice™ Report to get real-time updates on your home value.

The West, City Centre and North West are the most expensive zones in the city and the most prone to shock during boom and bust periods. These zones experienced a 32.5% decline in sales volume and a 2.7% decline in home prices in the year after the oil price shock. This compares to the rest of the city, which experienced a 21.3% decline in sales volume and a 0.3% decline in home prices. 

COVID-19 Impact: What have we observed from past epidemics and what’s happening today?

The COVID-19 pandemic has left would-be home buyers and sellers across Calgary with great uncertainty. Consumers are responsibly practicing social distancing and that is being reflected in a decline in overall real estate activity.

Showings and other real estate activity are in decline. Based on data from ShowingTime, a company that facilitates and tracks real estate home showings, Calgary is experiencing a rapid decline in activity commensurate with what has been seen in other markets during epidemics. The data reveals that real estate showing activity across Alberta has fallen off severely with an 86% decline since March 12 as the impact of COVID-19 continues to grow and potential buyers practice social distancing measures.

Sales volumes in Calgary are also in decline as a result of COVID-19. The following chart shows the decline in sales since social distancing came into effect on March 15th.

During the current COVID-19 crisis in China, transactional data from Capital Economics reveals that while 2020 daily property sales across major cities are still well below 2017-2019 levels, they are rebounding at a rapid pace as the country works to restart its economy.

What have we seen in past epidemics? During events such as 1918 Spanish Flu or the 2003 SARS outbreaks, there is a pattern of economic activity falling sharply during the epidemic, in the form of a ~10% hit to GDP or industrial production over the course of the epidemic, followed by a recovery after the epidemic is contained. During SARS, Hong Kong home prices did not fall significantly, but sales volumes declined as customers stayed home and practiced social distancing. In the period after the epidemic, sales volumes recovered to prior levels.

Pulling it all together: Oil Price Shock + COVID-19 Impact

The dual impact of (i) an oil price shock, and (ii) reduced economic activity due to COVID-19 is truly new territory. This said, we expect real estate sales volumes will continue their steep decline over the coming weeks. What happens to house prices is less clear, and will depend on how long the social distancing period extends, and the depth of the resulting recession.

At Properly, we’re working to answer top-of-mind questions for our customers. Using both the practical expertise of our Realtors (including first-hand experience from the Great Recession and the oil price shock in 2014) and the data science skills behind our ProperPrice™ Report (predicting actual home selling prices with 99% accuracy), we’re here to provide information for Canadians looking to buy or sell this year. 

For additional insight on the Calgary real estate market during the 2020 oil price shock and response to COVID-19, please contact us at

Calgary Real Estate Board (CREB) data

The Economic Impact of an Influenza Pandemic by Steven James and Tim Sargent (Finance Canada)

Industry classified as “Mining, quarry, and oil and gas extraction” per the 2016 Stats Can census. Estimate of labour force in the oil industry is based on Dissemination Areas attributed to City of Calgary’s Zones and geographical weighting of labour force composition

WTI Crude Price via Federal Reserve Bank of St Louis

Impact of COVID-19 on Real Estate Showings in North America

Capital Economics: The Economic Effects of the Coronavirus

Has SARS infected the property market? Evidence from Hong Kong by Grace Wong (Journal of Urban Economics)