Market overheating in Cold Lake
Oilsands drive house prices up in ‘Little Fort Mcmurray’
Cold Lake – Cold Lake may not have a hospitable name, but Nicole Mansfield warmed to it almost instantly three years ago after her husband’s struggles as a Newfoundland fisherman prompted a move.
Deciding to trade cod for crude, the family of four packed up their $30,000 home on the Atlantic coast and headed to northeastern Alberta, where her husband found work in the oilfield-services sector. The decision has resulted in a dramatic improvement in the Mansfields’ income, yet the family soon ran into a new and unexpected financial hassle — finding an affordable place to live.
Currently renting a fourbedroom duplex for $1,450 a month, the family has been told they will have to vacate within six months, as the landlord is hoping to cash in on skyrocketing real estate prices.
Mansfield says renting a similar place will cost at least $2,000 a month, and buying a home could be even more financially unreachable, if a suitable one is even available on the market.
“It’s quite the culture shock when you buy a place in Newfoundland for $30,000, and then you come here and it’s like, ‘What?,’ ” says Mansfield, an administrative assistant for the local chamber of commerce. “If I was to sell my home back in Newfoundland now, I’d probably get $55,000 for it. That’s only a down payment here.”
As Cold Lake Mayor Craig Copeland notes, the housing supply is just one of the major issues facing a community now being called “Little Fort McMurray.”
The nickname is apt, because the city of 14,000 people is experiencing virtually all of the same growth pressures as the more prominent oilsands hub to the north, including a troublesome highway, overburdened infrastructure and a skilled-labour shortage.
The hospital’s emergency room is under pressure, kindergarten classes are full, police are busier than ever, and there is a wait list of 150 names for dock space in the marina, Copeland says.
The city’s growth, measured by Statistics Canada at 15.4 per cent from 2006 to 2011, is being driven by a massive expansion in oilsands operations, which are now collectively cranking out about 500,000 barrels a day. Major players such as Imperial Oil and Cenovus have brought scores of young men and their families to the area with promises of high wages.
“The story here is a 27-yearold working in the oilpatch, who owns a house already, a quad, a boat and a big, fancy truck,” Copeland says. “And some of them also own one to three rental properties. So the young people here are really doing well for themselves.”
The downside is that this flood of high-income earners has created huge demand for housing, pushing prices beyond the reach of workers such as teachers, restaurant employees and retail staff. It’s also created headaches for many of the 2,200 people who serve at 4 Wing Cold Lake, the sprawling fighter base that lies just southwest of the city.
Copeland said the average home price in town this year was $355,000, and it could hit $400,000 by next year. That’s ahead of Edmonton, where the average sale price in November was $331,000.
“We probably have at least another 500 to 1,000 workers coming to Cold Lake to work on these big projects in 2013,” Copeland says. “Where those people are going to live is going to be interesting. I suspect the city could be a city of wheels, where you have campers everywhere.”
The fighter base, which hosts a major aerial combat exercise each year called Maple Flag, may need tent cities and trailers to house all the international crews who participate, he says.
Cold Lake homebuilders are scrambling to keep up with demand, on a record pace to develop 150 to 160 lots this year. But it’s nowhere near enough.
“It’s been busy here the last 12 years, but it’s really picked up in the last year,” says Grant Benoit, owner of Value Master Homes, which currently has 40 properties under construction. “The prices are really getting out of range for some people, which is unfortunate for them because they have been a big part of our community.”
Benoit said the biggest obstacle to faster progress is a lack of electricians, concrete finishers and other skilledtrades workers. Recruitment efforts around Alberta and Saskatchewan were a failure, so Benoit has been forced to look for workers as far away as Scotland.
Meanwhile, the development of new homes means extra costs for the city, which is responsible for constructing all of the services that go with them, including new sewers, utility lines and roads. One of the most pressing projects is a new $50-million waste-water treatment plant, which Copeland hopes will draw contributions from the federal and provincial governments.
He says Cold Lake is set to spend $270 million on infrastructure over the next 10 years. Much of that will go to upgrading sewers, but the city is also investing heavily in recreation amenities to serve its young population. A new arena was just built, and the city is moving ahead on a gymnastics building, outdoor rinks, soccer pitches, baseball diamonds and trails.
“We’re trying to make it a really good place to put down some roots,” Copeland says.
He says all of this was made possible through a deal struck by the province last year to divert more tax revenue from energy companies operating on the nearby Cold Lake Air Weapons Range. The agreement has meant $11 million in new money each year for the city, and that could grow as high as $20 million by 2017, he says.
Before the deal, the city was deep in debt and unable to address its infrastructure needs through its existing tax base. Copeland and his council even tried to solve the problem by asking to have the city dissolved into the neighbouring Municipal District of Bonnyville.
One outstanding issue is the state of Highway 28, the main thoroughfare carrying a growing number of oilfield employees between work and home.
As for Mansfield, she’s just anxious to have a place to call home in six months.
“I don’t want to move out of Cold Lake. It’s just big enough. There are amenities here for the kids. It reminds me a lot of home, with the lake,” she says. “But if there is nowhere to live, that obviously doesn’t work.”