Residential sales across northern B.C. reached near all-time records in the third quarter but concerns are rising about market sustainability if the COVID-19 pandemic persists.
“The third quarter of 2020 saw the second-highest sales on record in the region since data was collected in 1980, “ said Shawna Kinsley, president of the BC Northern Real Estate Board (BCNREB).
Total sales through the board’s multiple listing service increased 32 per cent in the third quarter, compared to the same period in 2019, but active listings fell by 24 per cent.
“Government support and mortgage deferral programs helped to prevent financially vulnerable households from being forced to sell. As a result, the average [home] price is up by 14 per cent year-over-year to $384,999,” the BCNREB reports.
But the third quarter was something of a flash in the pan, data shows, since the total sales volume this year is up only marginally from a year ago, and key northern markets have seen modest or negative performance. For the first nine months of 2020, 3079 residential properties sold worth $1.2 billion. This compares with 3,741 sales in the same period in 2019, worth $1.1 billion.
“The competition is getting tough in several regions including Prince George, Fort St. John, Smithers, Terrace, Kitimat and Prince Rupert,” said Freddy Marks, an Agassiz-based real estate agent who specializes in northern and Interior B.C. real estate.
“Great demand and small supply continue to create multiple offers on medium- to lower-priced housing,” said Marks, who heads the 3A Group with Sutton Showplace Realty.
But Marks cautioned the effect of the ongoing COVID-19 crisis may yet to be realized, suggesting the last three months of the year will be telling.
“It is October’s unknowns that will decide the fate of so many,” Marks said.
Marks suggested that if the pandemic continues and government assistance falters, B.C. could see an insolvency crisis coming in both the residential and commercial markets, which could drive prices down.
“Commercial and residential landlords are a vital part of our economic fabric, and tough decisions derived from tough times may deliver a crippling blow to an entire market segment unless we can find a way to beat Covid-19,” he said.
Northern B.C.’s economy is largely insulated from the pandemic-linked recession because of massive infrastructure projects, including the construction of gas pipelines, a new liquefied natural gas (LNG) export terminal at Kitimat, and the construction of BC Hydro’s Site C dam power project near Fort St. John.
There are about 1,600 people employed now in Kitimat at the $17 billion LNG Canada project. The workforce is expected to peak at about 4,500 throughout 2022 and 2023.
Close to 600 workers are employed on the associated Coastal GasLink pipeline, which is expected to have peak employment of 2,500, with completion slated for 2023.
Site C dam employs just over 3,200 workers, but typical pre-pandemic workforce numbers for the project were around 4,000. It is slated for commissioning in 2024.
Still, the unemployment rate in Northern B.C. has more than doubled from pre-pandemic levels and, at 13.7 per cent in September, is the highest in the province, according to Statistics Canada.
The LNG projects have not yet delivered a big stimulus to key northern housing market.
So far this year, sales in Kitimat have increased by just nine homes compared to 2019, to 79 transactions, which is down from the 99 sales two years earlier. The average home price had fallen 12 per cent from a year ago to $343,500 as of the third quarter.
In Fort St. John, which is benefitting economically from both pipeline construction and Site-C construction, home sales, at 393 units, and average prices, at $373,700, are both virtually unchanged from 2019.
Prince George, the largest city in the north, has seen average prices edge up 8 per cent this year compared to 2019, to $401,000, but sales through the multiple listing service had fallen 8 per cent to 661 transactions as of September 30, reports the BCNREB.