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 is $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 tops among the northern B.C. communities surveyed by the BC Northern Real Estate Board in releasing sales results for the first six months of this year.
But the number of sales have declined with 71 properties worth $37.7 million sold in Kitimat for the first six months of this year compared to 95 properties worth $22.7 million last year. And 134 properties worth $45.6 million sold in Terrace so far in 2019 compared to 173 properties worth $49.6 million for the same period in 2018.
The results aren’t surprising to Kitimat Re/Max Realtor Graham Pitzel, noting 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,” says Pitzel in recalling the sale of virtually every available listed home.
“This is just the early early stages of this project though and we saw a very similar trend during Rio Tinto’s modernization.”
“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 here [with LNG Canada] and given the longer timeline I would imagine we could even see up to 18 months post [LNG Canada] final investment decision of a stable market before things really being to take off,” Pitzel says.
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 and the same is going on in Kitimat although there, says Pitzel, 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 says.
He also notes 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 says.
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 adds.
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 that Kitimat has to offer and supply and demand always dictates pricing,” says Pitzel.