Economy

Where real estate prices are soaring

Kitimat basks in gas boom.

Don Denton/CP

Don Denton/CP

Just six years ago, Kitimat, B.C., was on the brink of implosion. Statistics Canada cited the northern coastal community as the city with the greatest population decline in Canada. The vacancy rate for rental homes was 44.5%, and jobs were hard to come by.

But now Kitimat is the focus of an energy export boom. Real estate agents are fielding calls from buyers in Alberta who are snapping up property for personal use and business development. Home sales in 2012 almost doubled those in 2011, and Shannon Dos Stantos, an agent with ReMax Kitimat, estimates close to 60% of the sales are from buyers in the Lower Mainland or Alberta. Prices are rising accordingly. Half-duplexes that sold for $60,000 five years ago now go for twice that.

“You can practically see the next generation of Kitimat being built,” says Mark Litwin, a commercial real estate broker with Royal LePage. “It’s in the air. We’ve had competing bids for sites as big as 50 acres, [from] hoteliers, developers, industrialists…all wanting to invest as quick as possible.”

The force behind the boom is a rapidly developing liquefied natural gas sector. Three LNG plants with a capital cost of $20 billion are proposed for the city. The first and smallest of those, the Douglas Channel Energy Project, should be operational by 2015. Two much larger projects led by Shell and Chevron should roll out by 2020.

As it is, the city’s original raison d’être, an aluminum smelter, is being modernized by owner Rio Tinto Alcan. Kitimat is also where the proposed Northern Gateway pipeline would end, the port from which its oil would be shipped to Asia.

Offering perhaps the best indicator of a growing town, the city’s first Tim Hortons is due to open this year. The local mall, once close to dead, is welcoming new retailers.

Local politicians who until recently were working hard to save the city from dying are now attempting to save it from itself. Mayor Joanne Monaghan says city council is occupied with trying to steady rising rents and control traffic. Council is considering starting a commuter ferry service to bring workers to Kitimat from nearby coastal villages. At the same time, it is competing with Prince Rupert and other ports for LNG plants.

Kitimat has experienced boom and bust before, and so is familiar with the cycle and its trappings. Monaghan is particularly concerned that the city could become crowded with workers who don’t fit in. “There aren’t jobs for people who aren’t skilled,” she cautions. The town is working on bolstering emergency and hospital systems, but is struggling primarily with real estate.

“I wish we had more houses,” says Dos Santos. “I could sell 10 bungalows today, if they were listed. A lot of people locally are wrapped up in the industrial part of things. There are not enough people putting hammer to nail on new builds.”