Our earlier articles at Robert Floris’s  Mortgage Architects office had predicted a slowdown in Alberta, we did not predict how quick it would come. People were excited with the lower oil prices but people are really afraid in the oil provinces with all the job cutbacks. Housing prices are expected to drop by 10%, but is this only the beginning? Although the rates are outstanding, if you think you may not work then buying a home is out the question. We will keep our eye on this trend to see if it spills to the Hamilton Ontario area.

Home prices in Canada’s oil capitals will suffer a correction this year as plunging oil prices turn the

nation’s housing market upside-down, say TD economists.

Prices are on track to fall as much as 10% in Calgary, Edmonton and St. John’s Newfoundland over 2015 and into 2016 as the collapsing oil industry hits growth, incomes and employment.

“A significant softening in job markets will set the stage for a second major housing correction in Calgary and Edmonton since 2008,” TD economists Derek Burleton and Diana Petramala write in their report Thursday.

It’s a dramatic turnaround in a national housing story that saw Calgary leading price gains last year. Calgary homes prices climbed 9.8% year over year in 2014, the biggest increase among big cities.

But the 50% drop in oil prices since June is already taking its toll. By January, Calgary and Edmonton house sales had slumped 45% and 35%, respectively, from last year’s peaks.

Oversupply will further pull down prices. Listings have spiked in Calgary and Edmonton and record home building (up 50%) in those two cities last year will put more pressure on prices.

TD expects Alberta will narrowly avoid a recession, but the hit to incomes and rising unemployment will make it feel like one. The outlook for Newfoundland is much worse, with the province headed for recession this year.

Unlike the west, Newfoundland’s housing market was already in trouble, with prices down 35% from the 2012 peak. The oil shock will extend what is now a three-year housing downturn.

While the oil capitals battle these headwinds, other parts of the country are expected to hold up well, despite repeated calls for a national housing crash over past years.

Housing markets in British Columbia are expected to be the best performers in 2015.  A mild correction in 2011 and 2012 slowed home construction and the resale market has rebounded. TD says the market  will be driven this year by solid economic growth, an influx of people from Alberta and the continued confidence of foreign investors.

Vancouver and Toronto housing markets are expected to see moderate increases, while Montreal and Ottawa are expected to be flat.

Robert Floris is an independent mortgage agent with Mortgage Architects in Hamilton.