Alberta’s real estate market was pummeled in the 1980s as a result of a confluence of factors. In 1980, the federal government, as part of its spring budget, initiated the National Energy Program (NEP), that created incentives to drill outside the western sedimentary basin as well as placed price controls on what Canadian oil firms would receive for their crude. A legal challenge ensued between Alberta and the federal government and the uncertainty surrounding investment harmed the provincial economy. Housing prices declined and by the mid-1980s, both commercial and residential real estate values had declined so significantly that homeowners, who had lost their equity in their homes, walked away from their mortgages. Oil prices began a decline in 1985 and this, in turn, decimated local financial institutions.
At present, residential real estate prices have remained flat in Edmonton with small declines in prices in Calgary. Within the higher end homes, price declines have been more significant. Thus far, this is little evidence that foreclosure activity has picked up significantly.