Home values ride the commodity cycles

Bust in coal areas balanced by booms in LNG towns

It’s not surprising that we would see... some negative impacts on residential pricing.

BRYAN YU

ECONOMIST, CENTRAL 1 CREDIT UNION

Home values in resource- based communities across Northern B.C. boomed last year, but look a little closer at the numbers and there were some busts as well.

Plunging coal prices and optimism over proposed liquefied natural gas resource projects sent assessed single-family home values in communities shooting in opposite directions.

Wide fluctuations in residential home pricing can be linked to resource market swings and expectations for the economy, said Bryan Yu, an economist with Central 1 Credit Union.

One of the deepest declines in northern home values was seen in Tumbler Ridge, where assessed values for singlefamily homes fell by more than 14 per cent from $246,000 on July 1, 2013, to $210,000 on July 1, 2014. Walter Energy laid off hundreds of workers at two local mines early last year as metallurgical coal prices tanked. Other mines in the area have also since shut down their operations.

“It’s not surprising that we would see — with potentially lower incomes in the area due to the mine shutdowns — some negative impacts on residential pricing,” said Yu.

However, home values in places like Fort St. John and Taylor increased by more than eight per cent — $347,000 to $376,000 and $286,000 to $311,000, respectively — and that was before the province gave the goahead in December to the nearby Site C dam.

“They’ve actually seen some pretty rapid price growth in the past few years. It’s not about Site C per se, but it’s a lot about the natural gas development, expectations about LNG ... and also relatively higher incomes in the area,” said Yu.

Large-scale projects can drive up property values, and speculation can sometimes play a role in that, said Yu.

Communities located near proposed LNG developments saw their home values rise substantially from 2013 to 2014. Assessed values in Kitimat rose 39 per cent from $227,000 to $316,000, and 30 per cent in Terrace, from $244,000 to $317,000.

Prince Rupert saw a 17-per cent jump in single family home prices from $196,000 to $229,000, and nearby Port Edward rose more than 20 per cent from $126,000 to $152,000.

The valuations were made before Petronas and BG Group delayed their respective LNG projects.