Single-family home assessments in Kitimat rose by double digits last year, reversing what had been a downward trend of several years as well as indicating rising prices based on LNG development speculation.
As of July 1, 2018, the average Kitimat home was assessed at $235,300, a 20 per cent jump from the July 1, 2017 assessment of $195,700, indicates information released today by the BC Assessment Authority.
The increase in strata title assessments was even more pronounced — up 31 per cent from $103,800 to $136,400 as of July 1, 2018.
In comparison, single family home assessments dropped an average 16.2 per cent as of July 1, 2017 from the year before.
And while assessed values increased as of last July, continuing sales since then indicate prices are still rising on the strength of LNG Canada announcing its decision on Oct. 1, 2018 that it was proceeding with its $40 billion liquefied natural gas project in Kitimat.
A graph published on the BC Assessment Authority website shows values now more than 30 per cent higher for single family residences based on sales in Kitimat in the third quarter of last year when compared to July 1, 2017.
The BC Assessment Authority bases its values on real estate sales and the annual July 1 snapshot is used by local governments in setting property taxes for the following year.
But how the Kitimat assessments play out when it comes to 2019 District of Kitimat property tax bills has yet to be exactly determined because council has yet to finalize its spending plans for this year and subsequent revenue requirements.
Generally speaking, home owners whose assessments declined by more than the average could expect to pay less than those homeowners whose assessments increased by more than the average.
Kitimat REMAX realtor Graham Pitzel noted that Kitimat property values rise and fall based on the community’s industrial activity and prospects.
“Rio Tinto had a union contract renewal in 2017 that had a contentious issue regarding the pension plan as part of the negotiation and that created some uncertainty as to whether the contract would be accepted or rejected by the membership. Ultimately this contract was accepted and business continued as usual, but for about 6 months prior there was a lot of uncertainty around that issue and most buyers wanted to hold tight to see what happened,” he said.
Interest in real estate began to solidify in the early part of 2018 when the provincial government announced a specific tax regime for LNG projects providing certainty for investors, Pitzel added.
“This caused buyers that were on the fence, to make a decision as to whether they wanted to purchase or not, that now was the time to get in or they may wait themselves out of the market with price increases,” he said.
For 2018, residential sales more than doubled the total for 2017 and 2018 ended with a surge following LNG Canada’s Oct. 1 final investment decision announcement, Pitzel continued.
“For 2018 we had a total of 230 residential sales in Kitimat for $63,754,624, and for 2017 we had 104 residential sales for $22,712,230,” he said. “From September 30, 2018 (when investors kind of started speculating on a positive final investment decision) until the end of 2018 there were a total of 76 sales for $25,103,880.”
That meant in the fourth quarter of 2018, sales amounted to three-quarters of the 2017 total, a factor accompanied by higher prices for properties that were sold.
As of this week, there are 101 properties on the market here, a figure Pitzel said is not that unusual for this time of year.
And as the year progresses, he’s anticipating a continuing increase in sales activities as LNG Canada construction activity ramps up.
“We saw everything get sold in October of 2018, I believe the number was 91 per cent of homes listed were sold in that month, and then the market did replenish itself for the next influx of investment which I believe will be when the workers start to show up for the project. This should be in the next couple months as a starting period,” Pitzel said.
“We are in for quite the ride here in town over the next decade or so with the LNG Canada project moving forward and there is still a great potential for other projects in our area, such as the Kitimat LNG plant, a floating LNG plant by the Haisla, a propane export facility as well as 2 very large refineries that have had new life in the past couple weeks due to Alberta’s unhappiness with their ability to transport crude oil out of the province,” he added.
Pitzel also noted that house prices here still very low in relation to the rest of the province but wages are much higher than elsewhere, giving residents “the ability to still get out and enjoy the area we live in.”