The value of homes in communities dependent on resource extraction has taken a beating in 2015, the sour note in a general rise of residential real estate assessments.
A long slide in copper and coal prices has led to layoffs and mine closures in mining towns such as Trail, Elkford, Fraser Lake and especially Tumbler Ridge, where home values dropped a whopping 36 per cent.
“The drop in commodity prices having a negative impact on many communities that are dependent on resource projects,” said Jon Garson, president of the B.C. Chamber of Commerce. “When you look at the collapse in coal prices and the mine closures that followed, you’ll see that places such as Tumbler Ridge are going to have some economic challenges.”
Communities across northern Vancouver Island have experienced steep multi-year declines in the assessed value of homes, but none steeper that Tahsis, where residential real estate dropped by more than 11 per cent in 2015.
“The population in the area has dropped and that has been the case for a long time,” Mark Tatchell, chief administrative officer for Tahsis.
The closure of the sawmills in Tahsis more than a decade ago triggered a long decline, but the picturesque west coast village is hardly alone. Port Alice has seen values drop by nearly 20 per cent over two years. The local economy was devastated earlier this year by the temporary closure of the Neucel Specialty Cellulose pulp mill, which has no firm plans to reopen.
However, declining real estate values appear to have triggered a recent influx of young self-employed workers and telecommuters to Tahsis, according to Tatchell, who added that the infrastructure and amenities built while the mills were open continue to provide excellent quality of life.
“And lower housing costs make this an incredibly affordable place to live,” he said.
Peachland, Summerland, Lake Country and Penticton — cabin country to many Albertans — all seem to be weathering the recent decline of oil prices and the devastation that has hammered so many communities in southern Alberta, posting modest increases in residential real estate values.
Kelowna and its surrounding communities have seen strong growth in housing prices for the past two years, partly due to tourist dollars flowing in with American visitors attracted by our low dollar.
“Tourism has had a really good year, but in Kelowna you’ve also got a university, the wine industry and a very vibrant tech sector,” Garson said. “Everyone thinks of Kelowna as a tourism town, but it has far more to offer than that with great economic opportunities and quality of life. The climate doesn’t hurt them either.”
Communities poised to benefit from the expansion of the liquid natural gas (LNG) industry have seen solid two-year appreciation in housing prices, according to figures released Monday by BC Assessment.
Prince Rupert’s real estate values are benefiting from anticipated LNG activity and an expanded port.
“Prince Rupert will be a focal point for the LNG industry and the housing market is anticipating that,” Garson said. “People are trying to get in ahead of the price increases and that’s itself driving up prices.”
Nearby Port Edward — the town closest to the proposed Lelu Island LNG facility — has seen homes rise in value by more than 30 per cent over the past two years.
“Kitimat has gone through some major expansion at the Kitimat smelter and that is projected to do quite well in 2016,” he said.
That optimism helped drive a 38-per-cent spike in residential real estate values in 2014, but high housing prices proved unsustainable and dropped by almost 12 per cent in 2015.
“There is some uncertainty there with LNG and I think what you have seen this year is a correction, where high housing prices have scared a few people off,” he said. “When small communities see big spikes in price, demand drops quite significantly.”