Kitimat housing affordability the second highest in northern B.C.

Kitimat housing affordability the second highest in northern B.C.

This is a great time for first-time buyers to get into the market

Affordability of homes in Kitimat improved by 16.7 per cent in 2017 compared to 2016, making it the second most affordable town in which to buy property in the north.

Figures released by the BC Northern Real Estate Board (BCNREB) for 2017 lists Kitimat’s Housing Affordability Indicators slightly lower than Mackenzie, situated 200km north of Prince George.

BCNREB executive officer Alexandra Goseltine said Prince George, Prince Rupert, Smithers and Williams Lake saw affordability worsen by between four and 10 per cent.

“In most cases, worsening affordability can be attributed to increases in average house prices. The most affordable community in northern B.C. remains Mackenzie, where homeowners require only 20.1 per cent of their annual income to cover the costs of housing.”

The indicators estimate the proportion of median household income required to cover mortgage costs, municipal taxes/fees, and utilities for the average single-family home.

The higher the measure, the more difficult it is to afford a home. For example, an affordability measure of 50 per cent means that homeownership costs (including mortgage payments, utilities, and property taxes) take 50 per cent of a typical household’s pre-tax income.

Changes in affordability also varied across the region. Kitimat, Mackenzie, and Fort St John saw affordability improve by 16.7 per cent, 3.0 per cent and 2.7 per cent respectively, while in 100 Mile House affordability worsened by 12.4 per cent.

“For Kitimat the main factor changing affordability was the drop in the average house prices. Other factors are not included as they changed very little,” said Goseltine.

“For 100 Mile House, which has an above average number of retirees living there, the median income rose a small amount though housing prices rose more.

She said McKenzie saw a small rise in average income and a small drop in housing prices.

“With smaller markets, average prices can be affected by the type of homes selling in any particular year,” she added.

Home ownership in northern B.C. remains exceptionally affordable, especially when compared with Vancouver. Historically, the largest contributor to affordability has been house prices, and this trend continues for 2017.

The average price of a single-family dwelling sold in northern B.C. in 2017 was about $290,000. Third quarter 2016 statistics list average Vancouver single detached house prices at over $1,500,000. In 2017, The Housing Affordability Indicator for northern B.C. was 28.9 per cent compared to 115.7 per cent for Vancouver.

In 2016 the Median Household Income was $74,147, while the average house price was $279,385. Average mortgage costs were $14,146.

In 2017, however, the Median Household Income increased slightly to $75,680, while average house prices dropped to $222,603 and mortgage costs dropped to $11,652.

Kitimat realtor Graham Pitzel said the increased affordability was being reflected in the Kitimat market, with some of the best house prices he has seen since he started selling property in Kitimat.

“This is a great time for first-time buyers to get into the market or for young families looking to upgrade to their first home,” said Pitzel.

“Pricing right now is probably one of the best in the province. We have a great quality of life and are very rarely ‘house poor’ up in the north. I can only imagine trying to get in to the real estate market in the lower mainland right now, and how much stress that could put on a family.”

He believes though that the increased affordability isn’t necessarily only related to lower house prices, but also to an increase in the Rio Tinto workforce since Rio Tinto and UNIFOR signed a renegotiated contract last year.

“House prices have slowly been declining for the past couple years and we have definitely seen the market slow down up until Rio Tinto signed the contract,” said Pitzel. “People were definitely holding their purses close until that happened.”

He said the market has stabilized and house prices are no longer decreasing as a result of increased sales.

“Prices and sales are almost proportional – as sales decrease the prices go down as well, but when sales increase prices go up with them. We have such a small market that even a few sales can have a fairly large impact on prices.”

He said the biggest challenge facing buyers is having unrealistic expectations for property in their price range.

“Some people have caviar tastes on a canned tuna budget.”

He said the average entry level home in Kitimat for a detached unit will run between $150,000 and $200,000 where there is not a lot of work to do to it.

“Anything detached between $100,000 – $150,000 is going to need some work before it is move-in ready, and over $200,000 is more for mid-level family homes with four or five bedrooms. This is the market area that is moving the quickest right now as we are seeing a lot of first time buyers having the ability to purchase their own home.”

He said the market is currently fairly balanced, favouring neither buyers or sellers too much.

To assess the housing market, realtors use a statistic called the sales-to active-ratio, the amount of homes sold in a month compared to the amount of homes that are listed.

He said when less than 14 per cent of homes listed are sold, that is considered a buyer’s market. When between 14 and 20 per cent are sold, that is a balanced market, and when over 20 per cent are sold it’s considered a seller’s market.

“In February of this year we had a 12 per cent sales-to-active ratio, so we are very close to a market that does not favour either side but is balanced, which is good for buyers as well as sellers.”

“We are seeing sales activity increase and not many new homes coming on the market, so we are hopefully bound to see the market start to favour sellers in the near future.

“The market changes very quickly in a small industrial town,” added Pitzel.

He said the increase in sales over the last six months is expected to continue until LNG Canada decides to go forward with the project in Kitimat.

“Whether LNG Canada is positive in moving forward or not, the closer we get to that date, sales will increase, so right now is a great time to get into the market.”

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