Speculation over a potential positive Final Investment Decision by LNG Canada contributed to a double-digit increase in the value of single-family homes in Kitimat.
As of July 1, 2018, the average Kitimat home was assessed at $235,300, a 20 per cent jump from a July 1, 2017 assessment of $195,700, indicates information released Jan. 2 by the BC Assessment Authority.
This is in stark contrast to the July 2016 to July 2017 assessment period which saw an average drop in the value of single-family homes of 16.2 per cent.
The increase in strata title assessments for the July 2017 to July 2018 period was even more pronounced — up 31 per cent from $103,800 to $136,400 on July 1 last year.
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 on Oct. 1, 2018 that the company was proceeding with its $40 billion liquefied natural gas project in Kitimat.
A graph published by BC Assessment Authority 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 determined because council has yet to finalize its spending plans for this year and subsequent revenue requirements.
Aside from the impact assessment values can have on a residence’s tax bill, the district may also increase taxes, which it did last year.
“We are unsure what the increase will be [this year] as the 2018 increase was set before the LNG Canada announcement. Three per cent was used for planning purposes but the actual increase will be set by council in the spring of 2019,” said district spokesperson Josh Marsh.
And unlike many local governments, the district has a flat tax system as well as a variable rate which is meant to safeguard single-family homeowners against large fluctuations from year to year. It’s based on the principle that homeowners on average use a basic or common level of service, regardless of a home’s value.
In 2017 that tax was $594, rising to $612 last year.
The tax provides just over 50 per cent of the district’s residential tax revenue.
Kitimat REMAX realtor Graham Pitzel noted that Kitimat property values rise and fall based on the community’s industrial activity and prospects.
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.