The average price of a detached house in Kitimat and Terrace has soared over the past year as the effects of the massive LNG Canada project in Kitimat begin to take hold.
As of June 30, the average price of a Kitimat house was $392,128 compared to $256,128 as of June 30, 2018, while the average price of a Terrace house has climbed to $386,494 from $321,985 over the same period.
Two years ago, the average selling price of a single-family detached house in Kitimat was $241,846 and $311,850 in Terrace.
The increases are the highest among the northern B.C. communities surveyed by the BC Northern Real Estate Board reflected in sales results for the first six months of this year.
However, the number of sales have declined, with only 71 properties worth $37.7 million sold in Kitimat for the first six months of this year, compared to the same period last year when 95 properties worth $22.7 million were sold.
Similarly, in Terrace, 134 properties worth $45.6 million have sold since the beginning of the year compared to 173 properties worth $49.6 million for the same period in 2018.
The latest figures don’t surprise Kitimat Re/Max realtor Graham Pitzel – he noted that there was a flurry in sales last October immediately following the announcement from LNG Canada that it would proceed with its $40-billion liquefied natural gas project in Kitimat.
“The market has slowed down to a steady state now. There are still some sales but not as crazy as we saw late last year,” said Pitzel, recalling the sale of virtually every available listed home in Kitimat.
“This is just the early early stages of this project though and we saw a very similar trend during Rio Tinto’s modernization project.”
“For the first year of their project there wasn’t a lot of activity, but once the majority of workers starting showing up we saw the trend spike fairly dramatically.
“We are in that first year [with LNG Canada] and given the longer timeline I would imagine we could even see up to 18 months post [LNG Canada’s] final investment decision of a stable market before things really being to take off,” Pitzel said.
One sign of an anticipated new surge in real estates sales is found in the number of properties for sale. As of June 30, 2018, there were 228 properties of all types for sale in Terrace, climbing to 262 properties on the market as of this June 30. The increase in Kitimat is more dramatic with 152 properties for sale as of June 30 compared to 57 properties on June 30, 2018.
At the same time, there are a number of subdivisions being developed in Terrace – similarly in Kitimat but with the emphasis is on multi-family builds.
“Post construction of [LNG Canada] I do not anticipate a large need for that style of home, so the District of Kitimat does need to weigh whether this type will be necessary, and how it will help the market through this construction phase,” Pitzel said.
He also noted the high cost of home construction and lot purchase, raising the issue of affordability.
New home construction now is in the area of $200 per square foot, not including lot prices of $150,000 at the lower end, placing a 2,000 square foot home on a lot at $550,000, not including driveways and landscaping.
“Now if someone wants to make money on that, the list price will be somewhere in the realm of $750,000 for that home. Not every buyer can afford three-quarters of a million dollars,” Pitzel said.
Property investors are also concentrating on a hot rental market with some four- to five-bedroom homes fetching anywhere from $5,000 to $6,000 a month, he added.
Land lease rates in Kitimat are now $15,000 per acre per month based on a limited supply while in Terrace land is more available with lease prices of approximately $4,000 per acre per month.
“This shows the supply shortage of rental units and industrial land in Kitimat – supply and demand always dictates pricing,” said Pitzel.
While average home sales prices increased in Kitimat and in Terrace, that’s not the case elsewhere, with the average price of a home dropping from $301,167 in Prince Rupert as of June 30, 2018, to $285,817 this June 30. In Smithers, the average price declined from $314,954 to $294,783 over the same period.
Houston, where contractors for TransCanada are building a large camp to the south of that community for the Coastal GasLink natural gas pipeline that will feed the LNG Canada plant, experienced an increase in sales from last year to this year with 28 properties changing hands, a doubling of activity.
The dollar value of the properties selling in Houston this year is $5.2 million compared to $3 million in 2018.