Image Credit: CFJC Today

By Ashley Legassic

FORESTRY CRISIS

B.C. forestry crisis having an impact on Interior real estate market

Feb 19, 2020 | 2:13 PM

KAMLOOPS — The province’s forestry crisis appears to be having an impact on the B.C. real estate market.

BC Real Estate Association Chief Economist Brendon Ogmundson says most housing markets in B.C. are expected to experience a recovery this year — but that likely won’t be the case for communities impacted by the declining forestry sector.

“We’ve had about two years now of declining sales since 2018 when the federal government brought in the mortgage stress test, and the provincial government brought in a number of measures to dampen housing demand as well,” Ogmundson says. “So we’re starting to come out of that. It has been asymmetric, some markets are doing a lot better than others. Mostly in the Lower Mainland where we’re seeing pretty big increases.”

According to January 2020 housing market numbers around the province, home sales are down in northern B.C., Kamloops and Vancouver Island.

“While provincially the economy is slowing, there are sectors that are doing a little better. I think the one that’s probably the most prominent in its struggles is the forestry industry and we’re starting to really see that link into things like housing demand as well,” he says. “So in the big forestry-focused communities — Kamloops, Vancouver Island and the north — we’re off to a pretty slow start in 2020 with all of those markets actually experiencing declining sales year over year in January.”

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Ogmundson says there was hope that the provincial budget released yesterday (Feb. 18) would include more support for forestry communities impacted by the crisis.

“There wasn’t a lot — there was about $13 million allocated for the forestry sector. It’s kind of a long term problem and there aren’t really easy solutions, a lot of it is on the supply side, some of the more short term stuff is difficulties with our largest trading partner in the United States. Also just softer global demand because the global economy has slowed due to rising trade tensions around the world.”

He adds that there are many issues that are unlikely to be fixed quickly, but there is optimism for the Kamloops housing market this year. Ogmundson says sales are expected to rise roughly three per cent with prices staying mostly static.

“In the north, we were more optimistic to start the year (that) we’d see a little growth in sales there as well, but that forecast is looking like it might not be a good one because we’ve seen much softer sales to start the year.”

Ogmundson says a provincial economic recovery is expected this year — much of which will be focused in the north due to the construction of the Coastal GasLink pipeline.

“There will be some trickle down effects to a lot of sectors that support that LNG project, so construction and other support services on the general kind of trade environment, and manufacturing which is big in Kamloops and the north,” he says. “I think we should see a bit of an upswing just as perhaps those trade relationships become a little less volatile hopefully over the next year.

“So I think there are some bright spots — interest rates are low and we’ve got some good news on changes to the mortgage stress test yesterday as well so I think there are enough that we should see growing housing demand and growing home sales over the next year, but again we’re talking about sort of less than five per cent growth in terms of home sales for most markets.”