A growing number of homeowners in Alberta are having trouble paying their mortgages on time, according to statistics from the Canadian Bankers Association.
The numbers, pulled from seven major banks in Canada, show that in June 2008 the number of people behind on mortgage payments three months or more doubled to 1,208, up from 659 in June 2007.
Bud Stein, a lawyer with Witten LLP in Edmonton, who specializes in foreclosures, said he is seeing five times more foreclosures than he saw in 2007. Stein said he has had approximately 550 foreclosure files since the beginning of 2008.
"To a very great extent, property owners have been living beyond their means," Stein said. "They've been living off the equity in their property and that's just not available to them any longer … they are just simply in over their heads in terms of their entire family debt load."
With the housing market in decline, Stein said, real estate speculators who bought multiple homes when the price was high are feeling the pinch.
"There are many, many cases where we have problem investors or speculators, if you will, who owned three or four … or 10 homes, and when property values stop increasing they were caught because they could no longer sell the property, take their profit and move on to the next one," Stein said. "Certainly [it's] far bleaker this year than it was last year."
But real estate experts like Don Campbell, president of the Alberta Real Estate Investment Network, isn't too worried.
He said the people in trouble make up only 0.28 per cent of all the mortgages in Alberta, and that's not enough to affect property values.
"It's not really going to affect what's going on in the marketplace. If your neighbour is going into foreclosure, it is not a time to panic."
Stein agreed there is no cause for alarm just yet, but said housing prices will likely continue to decline, and more people will find themselves unable to make their mortgage payments.