Alberta real estate is booming thanks to the province’s strong economy, but the pockets where the flood damage was severe inhabit a completely disparate reality. A number of experienced Calgary real estate agents say some disaster-affected homes have seen price drops of 10%. And for houses in the hardest-hit neighbourhoods with the worst damage – including homes that saw water slosh through their main floors or structures that need to be torn down – prices have plummeted 25% or more.

Now, as we approach the first anniversary of the devastating flood, these markets are in a state of limbo. The normal spring season of buying and selling has been marred by uncertainty about whether flood-mitigation dams and tunnels will be built, the city’s proposed new rules for building in flood-affected areas, and delays and disappointments in the size of payments coming through the province’s Disaster Recovery Program.

In the town of High River, Alberta’s hardest-hit community, the market is far from rebounding.

In Calgary’s flood-affected neighbourhoods, desolate houses and empty lots now sit next to properties undergoing full renovations. The average lost value in each of these homes – some in the most expensive neighbourhoods in the city – was $209,000. The high waters hit some of the most desirable and wealthy neighbourhoods in Calgary.

At the same time, Greg MacDonald with Sage Appraisals, at a presentation to Mortgage and Real Estate Professionals in Calgary earlier this year, stated that homes in areas that were 100% covered by insurance (i.e. sanitary/storm sewer back-up), and have been fully remediated, are not experiencing decreases in their pre-flood values.

Looking back at what was forecast in the week following the floods last year, Anne-Marie Lurie, CREB’s Chief Economist, said, “while it might stave off a bit of activity, you could actually see prices really continue to grow at the rates we’ve seen.“

Garth Turner, former MP and journalist, in response to Lurie’s forecast, said, “Then Calgary would be unique.” Comparing Calgary to Brisbane’s 2011 post-flood market said “the average house price for the entire city – flooded or not – dipped between 10%-30% for months after.” He then went on to say that CREB’s comments were “as cavalier and self-serving as one would expect.”

Well it turns out that Lurie emerged the winner in that “debate” – the average price in the City of Calgary for June 2013 was $456,541 while the average price from July to December was $456,747. In addition, prices were up 6.3% over 2012 for the first half of 2013 and were up 6.8% for the second half of the year – exactly inline with CREB’s prediction.

Gary Cronin, long-time Calgary realtor who has been involved in almost half of the post-flood sales in in the hard-hit areas of Roxboro, Elbow Park and Rideau Park predicted that, “assuming we get through this June, which is our wettest season, I think you’ll see the demand increase. Within four years we’ll be fully back to where we were.”

But there are already signs that the high demand for houses in Alberta’s booming economy is creeping back even into the flood market. Nelson Karpa, the City of Calgary’s Chief Property Assessor, has already noticed that property values, depressed by the flood, slowly starting to inch toward pre-flood prices.

Since the disaster, the process of buying a house has become more onerous. Increasingly banks and insurance companies – which are conservative by nature – are clamping down on financing in markets where properties were affected by last year’s flood by making blanket decisions.

Lenders have been demanding extra proof that either, the property was not impacted by the flood, or that the property has been fully remediated. A copy of the flood map to identify exactly where the property is, a list of what remediation was done and who did it, and an inspection showing no moisture in the walls is typically required.

A RECA blog from February suggested that realtors working with sellers in flood-affected areas suggest sellers keep document all remediation work and keep all contractor receipts and make this information available to potential buyers.

As a realtor working with a buyer looking in these areas, discuss the possibility of putting a condition in the offer to purchase about the buyer’s ability to obtain satisfactory home insurance. It is also important to remind buyers that a “pre-approval” does not remove their need to have a financing condition in any offer to purchase.

It is important to note that lender rules and policies are fluid, changing as data becomes available to them. Before you start looking in these areas, and before you set your heart on a property that was flooded, talk to us! A property right on the river, with everything you need, and close to all the amenities, might make a great home, but it might not be an easy place to finance.