A warning is being issued about the challenges of housing development and construction in the Prince Rupert region by property developer and owner of Pacific Aurora Construction Limited, Kevin Stunder.
He said if people think housing in the region is bad now, it’s not going to get better even as we come out of the pandemic.
Stunder, whose company is behind the Eagle Dr. and Drake Cr. housing developments currently under build in the city, said he recognizes there is a need for affordable housing in Prince Rupert. He wants to be part of the solution to that problem. However, while residents, industry leaders, and elected officials are all calling out for developers to build in the Prince Rupert landscape there is a backside to that picture that may not be realized.
There are ‘structural issues’ in the market affecting property development in the Northcoast region, Stunder told The Northern View. Retirees want to downsize, young families want to expand but can not do so due to affordability, professional job applicants are not accepting employment placements due to housing constraints, and homelessness including families is on the increase.
The home building company owner said there is a limited amount of suitable land inventory with favorable ground conditions for residential development. Prince Rupert is built on an island of rock and muskeg, whereas neighbouring municipalities like Terrace and Smithers are built on riverbanks with an abundance of gravel and sand which is easy to excavate, Stunder said. Ground slopes, geotechnical limits, and, soil and drainage, make projects uneconomical. All of these issues result in a typical single-family home increasing the cost of a regular build by $50,000 to $100,000 more than other northern communities.
Apart from the foundational constraints to property development in the city, there are financial restrictions as well, he said. Banks are categorizing Prince Rupert investments as ‘high risk’ based on economies of past decades and the city needs at least 15-years of economic success before the risk category is lowered.
“The banks don’t have our backs until we can be successful in comparable projects,” the property developer said.
“For new developments lenders wish to see a study with comparisons in this market. Other than the few projects we have done, there are no direct comparisons as no one has built new multifamily projects for more than 20-years,” Stunder said, citing the example of the houses his company built on Van Ardsol that were the first multi-family construction in the city since the 1990s.
As a financing condition banks are requiring 70 to 80 per cent presales in the region, which has never been tested in Northwest B.C., he said. This is affecting developers.
On the flip side affecting buyers, new federal mortgage testing will start in June and the affordability will drop even further, the property developer said.
“To finance a new home, most banks will require larger than normal deposits,” Stunder said. “Once a home exceeds $500,000 banks will require an additional 50 per cent downpayment over that amount to cover the risk.”
Then there are increased costs and pressures of getting material to Prince Rupert. For example, concrete is $305 per cubic metre in Prince Rupert, whereas in Vancouver the same produce costs $165 per cubic metre. Gravel is $28 per cubic meter in the city and only $9.00 down south.
Stunder said lumber costs have increased between 100 to 500 per cent in the past year. A typical lumber package for a new single-family residence has doubled with a four by eight sheet of plywood increasing from $33 to $65, and dimensional lumber increasing 300 per cent. Stunder said this results in the lumber for a typical family home jumping from $48,000 to $100,000.
The complications do not stop there, Stunder said. Labour is an ongoing issue, and while the local industry may be booming with high-paying jobs, it is hard to keep a team focus.
“Prince Rupert is not ready for a housing boom like other jurisdictions. Very few construction teams and trades remain from the past boom days,” he said. “Those coming to the area are opting for industrial jobs.”
Stunder forecasts that marketing tightening from the COVID-19 pandemic is a warning with continued displacements due to renovictions and increased resale prices and rents. He believes industry will need to set up camps for temporary and fly-in employees, as well workers may choose to live in Terrace or other areas to commute.”
“Industry will struggle to hire and hit goals without housing being incorporated into their business strategy,” he said.
While the situation may seem dire and paint the picture that housing development in the city has stalled, there are few solutions Stunder sees as perfectly workable for the regional situation.
Developers and builders can get creative by constructing smaller infill homes on smaller lots by adapting shape and multiple units. Building material and supplies can be locked in. Expectations must be set at realistic levels Stunder said, with the realization that new homes carrying a 10-year warranty will cost more in Prince Rupert and Port Edward than in other areas. As well, housing will lag compared to the local growth.
Provincial and municipal governments can also assist he said, suggesting that the new municipal downtown revitalization tax incentive could be extended to multi-family housing developments to enable a kick start for new builds.
Downtown housing will thrive after the city core is revitalized, he said.
“My experience in urban planning is people want to live downtown after downtown’s revitalized. They want to live near those new amenities and nice new storefronts, in a fun thriving area.”
Stunder believes that getting involved in housing and initiating a housing authority will help to create and sponsor new homes, as well as continued BC Housing investments will assist in supporting the area.
“Solve the muskeg. If the Feds think the Port is strategic to invest in, perhaps they can agree to help in this capacity also as they solely have the access to crown lands,” Stunder said, suggesting that local industry should continue to share business forecasts with builders for incoming jobs as it will encourage plans for new developments.
The property developer said his recommended changes for industry would be to get involved in housing as a business strategy by buying or leasing housing to make a competitive differential and to partner with benefits.
“So, the call to industry is to get housing discussed if they think they are going to add 20 people in 2023 … it’s just to contribute to some social housing, they could look at doing leasing of homes to make sure that displacement of locals is protected.”
“It should be a case of if you cause new jobs, then cause new homes,” Stunder said.