experts: real estate column Monday, May 03, 2004

Safest Investment is in Growth Areas

Virtually all rural regional districts in BC will have less people living there by 2005 than they did in 1996. What does this mean for real estate investors?

By Ozzie Jurock

This article appeared in The Vancouver Sun on May 1, 2004

While the population of British Columbia is projected to increase to 4,275,000 by 2005 from 4,100,000 today, at least 16 regions and more than two dozen cities and towns will continue to lose population during the same period. This means more than half of the 29 regional districts in the province are seeing a decline in population and the trend is accelerating in most resource areas. It could be seen as a new crop of ghost towns in the making.

Virtually all rural regional districts will have less people living there by 2005 than they did in 1996. Statistics just released by BC Stats, (www.bcstats.gov.bc.ca/data/pop/pop/rd/rdproj1.htm) provide a grim prognosis for the future in the heartland of B.C., where downturns in the resource sector and a subsequent hemorrhaging of population have become defining characteristics.

Examples range from Prince Rupert, on the North Coast, which has lost nearly 20 per cent of its residents in the past decade, to Revelstoke, in the Kootenays, where the population has declined by nearly 500 people - to 7,300 - in the past five years. When B.C.'s major urban and recreational areas (the Capital, Greater Vancouver and the Okanagan) are taken out of the calculations, the rest of the province has virtually no population growth at all in seven years.

David O'Neil, a manager at BC Stats, says the regional population forecasts are not based just on a continuation of current growth patterns, but take into account major project announcements, inter-provincial migration and a number of other variables that could affect a specific regional district.

This doesn't mean that all regions with negative population growth are poor risks for real estate investment. For instance, while the population of Fernie has been falling since the mid-1990s, the city has strong potential due to its proximity to new Kootenay ski resorts.

And, while Prince George has lost 3,000 residents since 1996, several factors point to a stronger upside in the rental market. These include the popularity of the city's new university, a regional hospital expansion and recent rail and airport spending.

Or, consider Houston, which has lost population steadily but is now the site of a $26 million investment by Canfor, which is creating the largest sawmill in the world. The high-speed mill will produce 2,300 boards a minute and will employ 365 workers.

The opposite can also be true. Whistler is a growing town, but spiraling real estate prices have lowered its allure for investors.

Take a look at the following charts:

B.C. Population forecast - 16 regions with negative growth

POPULATION
Regional District
2005* 2001 1996
Alberni-Clayoquot 30,697 31,806 32,906
Bulkley-Nechako 41,778 42,823 43,383
Cariboo 67,631 68,848 69,976
Central Coast 3,822 3,941 4,087
Central Kootenays 59,117 59,801 60,324
Comox Stathcona 100,622 100,755 101,520
East Kootenays 58,568 59,200 58,608
Fraser-Fort George 100,330 99,914 103,202
Kitimat-Stikine 42,168 42,842 45,457
Kootenay-Boundary 32,673 33,376 34,134
Mount Waddington 12,803 13,748 15,224
Northern Rockies 6,067 6,010 6,127
Peace River 58,847 57,726 58,887
Powell River 20,144 20,716 20,698
Skeena/Queen Charlotte 21,981 22,744 25,863
Stikine 1,377 1,365 1,450

Statistics: BC Stats/August 2003 * Projection

B.C. Population forecast - 7 regions with explosive growth

POPULATION
Regional District
2005* 2001 1996
Capital Region 351,586 344,077 331,761
Central Okanagan 165,770 154,854 141,912
Fraser Valley 263,800 248,964 231,440
Nanaimo 138,445 133,118 126,483
North Okanagan 78,245 76,754 74,344
Sunshine Coast 28,122 26,732 25,833
Greater Vancouver 2.21M 2.08M 1.91M+

Statistics: BC Stats/August 2003 * Projection

Here are the major points investors in real estate need to consider:

  1. The trend of population away from rural areas in B.C. is clear, but it can spell opportunity for those who research specific markets for specific investments. Personal research is the key to selecting the wheat from the chaff.

  2. If you are a flipper or a shark, population growth patterns don't matter. You buy the deal. Even property in Prince Rupert can be a good deal when the purchase price for a condo is less than $20,000, even with a declining population.

  3. For safe, long-term investments stay in the "growth areas." Values grow where people go. The places where people want to live and play are where investors will find steady rental income.

For more real estate investment information see Jurock.com.




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