Tag Archives: economic fundamentals

Ajax Mine – Fact vs Fiction

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There has been a lot of controversy ever since the Ajax mine project was announced in Kamloops a few years back.

This project could bring a few hundred high paying jobs to the area and be a healthy source of tax revenue for the city for 20+ years.

As the environmental review, a PR campaign and red tape is navigated by the company(KGHM International), the people of Kamloops are forming opinions.

Continue reading →

How to get ahead of a real estate boom

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Don’t you wish you could have bought a bunch of property in the 1990s before prices doubled?!

What if you knew for sure that a fortune could be made if you found a way to buy just one more house?

How would that money impact your life ? Or the lives of your loved ones?

My guess is that the extra wealth would provide security and more options for you to live fully.

But, it is impossible to know what the future holds….

Or is it?

With a basic knowledge base in economics and the workings of our financial system, we can accurately predict the future.

Don’t get me wrong.

I have no idea the exact date when real estate prices will surge upward again.

But I do know prices will rise rapidly, and one day we will be lamenting “if only I bought more in the 2010s.”

I know another boom is coming by following this proven formula:
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1. Signs of Kamloops GDP growth include tourism numbers up 19% in March

Also TRU’s growth from Caribou College now has it contributing $355M to the Kamloops Economy

2. There is 2 years of construction jobs during 2015-2017 for the Kinder Morgan Pipeline Twining.

At the same time the Ajax mine will likely begin construction(source).

Both these projects will lead to big demands for rental housing.

3. The Kamloops younger population is growing fast – future renters and buyers. (Source)

This is over and above those moving here for jobs.

4. Kamloops Rents are already rising(proof: read this article, and I just re-rented a unit for $75 more/mo without any renovations).

Another article: More rental available but at higher cost

5. Existing economic fundamentals are already influencing prices. House Prices have inched up 5% over last year(source) so imagine what will happen to this town when 2 large construction projects start simultaneously!

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As you can see, by following the news and recognizing the signs, we can position ourselves in front of the next boom in Kamloops!

Until next time,

Stay S.A.F.E.

Kamloops Feature Employer: Forestry

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Last month, I talked about the mining sector in Kamloops and what it contributes in jobs for the region.  Jobs are critical to Real Estate values because of the following formula:

GDP Graph

This month the feature employer is Forestry.

British Columbia is the leading exporter of forest products in Canada at more than $10 billion/yr. Recent years have shown a marked increase in exports.

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2013 yielded 37 million cubic meters of BC forest product exported to the USA, Japan, China and other nations.

4 million cubic meters come from the Kamloops Forest District, representing about $1B in exports coming from the Kamloops District.

 

Fibre Flow

“Fibre flow” is the term used to describe the movement of fibre (logs) from the point of harvesting the trees to processing facilities.

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Kamloops is the 7th largest forestry district in BCs Southern Interior for volume of logs harvested and/or scaled.

 

Mills

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Domtar Pulp Mill produces various paper products and employs about 300 people, and at least that many contractors. Numerous new efficiency upgrades ($120M since 2011) will extend the mill’s life another 20 years.

Domtar’s Kamloops mill is one of few that can process pine beetle kill and keep up quality. Despite a recent closure of a small “A” line, the Domtar mill has good prospects.

 

 

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Tolko operates the Heffley Creek Plywood Plant which employs about 200 people. Most live in Kamloops as it is a short 20km by highway.

There are also numerous Tolko lumber, plywood and manufacturing plants in the central interior. There is even a nursery in Armstrong.

These plants all rely on the trucking industry, and support this major employer in Kamloops.

Kamloops is at the cross roads of BCs major highways and many Tolko/Domtar products must pass through Kamloops for use in large markets such as the lower mainland or to be shipped to other countries.

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Domtar and Tolko each have survived the volatility of the 2009 USA housing crash that forced many mills to close. As such, they will be poised to take advantage of the lumber super cycle projected to start in 2015.

 

Manufacturing

Many manufacturing and fabrication companies (over 125) are based in Kamloops, like Loewen Equipment Manufacturing, a builder of heavy equipment used in logging.  Small business like this employ hundreds of people in support of the forestry industry and do much to support the Kamloops economy.

 

Summary

Global demand for wood products has been steadily increasing since the low of 2009, and Kamloops is well positioned to reap the rewards of a comeback in the global housing market, especially in the USA.  Changes in the economic cycle are coming soon, and the fact that both mills in Kamloops remain in service means it will be much easier for them to increase production in response to higher demand. Several industry observers are predicting an upcoming boom, and although the Forestry sector is “boring” there is money to be made.

The Kamloops Forestry District is responsible for $1B in exports, about 1500 jobs, and is a driver of the local economy that is here to stay.

Next month’s feature employer will be Health Care, so be sure to Subscribe so you don’t miss out on the next in this series of Kamloops’ employers.

Until next time,

Stay S.A.F.E.

Report: Kamloops’ future GDP set for growth

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Venture Kamloops commissioned a $30,000 report estimating the impact of several projects in Kamloops’ 10 year future. Capture2014VentureKamloops Some highlights:

  1. if nothing changes local GDP growth will hover around 2%
  2. ” if the Ajax mine proceeds to operation in 2018, a direct GDP impact equivalent to 0.5% of the region’s GDP value will be realized […] we have projected a real GDP growth rate of 2.5%. With the addition of the mine operation, the region’s GDP growth will be 3.0%, which is substantial.”
  3. Ajax Mine construction impact: 1,980 jobs, $2,073,600 municipal taxes
  4. Ajax Mine operation impact: 671 jobs, $900,000 municipal taxes
  5. Twinning of the Kinder Morgan Pipeline will add about $10,000,000 GDP for 2016 and 2017
  6. a Domtar closure would mean a loss of 1000 jobs and .2% GDP*

*The report projected a complete closure of the mill, however this is highly unlikely. If anything, the Domtar mill will be sold to another company, similar to what happened in 2007 when Domtar acquired the Weyerhaeuser pulp mill operation. Further the report states “RKA has no information regarding the likelihood of such a major decision.”   How does this affect Kamloops Real Estate Investors like me?

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The above GDP graph shows what happens when GDP grows in a region.  If When the above mentioned projects are implemented, we will see a significant increase in property values a short time later, just like what happened in 2006:kadreaCB75D6069938    I am betting that there will be a big jump in real estate values in Kamloops with a medium term view(within 5-10 years). In the meantime, rents are so high that purchasing in this market results in great annual returns, even with NO increase in house prices.

You can read the full Venture Kamloops report here.

Until next time,
Stay S.A.F.E.

4 Secrets to Pick a Winning Rental Property

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which one.

I am often asked about the real estate market in Kamloops compared to other cities.

Here is my answer.

I am an area expert in Kamloops and do extensive research here, so I know which properties in Kamloops are a sure thing.

When I hear someone tell me “I hear Edmonton is climbing like crazy” or “Fort St John and Dawson Creek are getting the site C dam and a pipeline!” I usually just nod and smile. Continue reading →

Kamloops: Low Taxes Good for Business/Residents

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Kamloops enjoys a lower municipal tax then many other BC cities.

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Among similar sized cities, Kamloops ranks near the bottom for the amount of taxes paid per person($609/year).

Lower taxes makes things more attractive for new businesses and new people to move here.

More people means more housing demand, which means higher rent and strong Real Estate prices.

Yet another reason to Invest Kamloops!

 

Until next time,

Stay S.A.F.E.

BC Housing Market Will Grow: Report

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British Columbia appears to be reaching the end of its pricing correction and housing starts will stop declining. Housing starts will post moderate and sustainable growth beginning in 2014.

Genworth Canada recently commissioned the Autumn Metropolitan Housing Outlook report. This report basically says Canada’s housing sector is in recovery and will be posting modest growth.

Genworth is a private mortgage insurer, like it’s public counterpart CMHC.

Just like all insurance companies Genworth wants to collect premiums without paying out any losses.

To that end, Genworth spends lots of money on research of the markets where it is insuring, including this 72 page detailed report.

The following graph is the report’s estimated future value of average property by city.

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Average prices are expected to hit the peaks experienced prior to the 2008 Global Financial Crisis by 2017.

Kamloops was not featured as this report focused only large cities, however we can infer that since prices in the rest of the country is forecast to rise, Kamloops will as well.

In fact, Kamloops will outpace the national average for reasons set out in my report.

Bottom line: there will be no “housing crash” in Canada, BC, or Kamloops. Instead we will witness a steady growth in prices.

If you have any questions or comments, please message me or comment below!

Until next time,

Stay S.A.F.E.

The coming Boom in Kamloops

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As you can see I had a great time with REIN this weekend in Coquitlam. I even got a photo with Don Campbell, the founder of REIN and author of eight awesome books, all of which I have read.

Click here for a you tube video where I briefly explain why Kamloops will see appreciation in the near future.

Watch for future blog posts, and click here to sign up for my newsletter, you will receive a FREE report on Kamloops.

Until next time,

Stay S.A.F.E.