Morice Land and Resource Management Plan
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Identified OpportunitiesTable 27 lists the Economic Development Action Plan Working Group’s Land Development / Infrastructure opportunities and their respective rankings. Table 27. Identified Land Development / Infrastructure Opportunities and Rankings
Only one opportunity was identified for the Land Development / Infrastructure Sector; recreational lot development. For consistency of process it was rated using the ranking criteria. The following section explores the criteria and conditions for developing this opportunity. For further information on these and other economic development opportunities interested individuals are asked to review the Ministry of Sustainable Resource Management, Building Blocks. Information on these Building Blocks can be obtained online at http://srmwww.gov.bc.ca/rmd/ecdev/analysis/building_blocks.htm . Recreational Lot DevelopmentOverviewMost of the interest in recreational lot development has focused on lakeshore and river front properties. An analysis of the requirements for recreational lot development is needed. Of particular interest to many is the need to know what constitutes a high valued recreation lot development area and what the economic benefits for such a venture are. Opportunity AnalysisThere are three critical issues to address in developing land: location quality and demand for the location, relative price of the raw product and project timing. Recreational lot development is actually of two types: ‘commuter’ lots and ‘recreational’ lots. Commuter lots are properties within 15 km of employment centers where purchasers choose to build their principle home on or over-looking the water. Tyhee Lake in Smithers is an example. Recreational properties are typically more than 15 km from employment centers and support the secondary cottage lifestyle. Recreational properties are usually on or over-looking water but may be simply escape properties many hours from an owner’s place of employment. Location AnalysisDemand for lots is highest on, or over-looking, water. There are sub-categories of recreational properties that planners could focus on. Power boaters prefer larger lakes, while canoeists prefer smaller chain-lake systems. Sail boaters are less sensitive to size of lake but are dependent upon wind availability and conditions. Fishers are dependent upon stocked lakes. Planners anticipating recreational lot development need to align product development with local recreational demand and select location quality to match potential customer needs. No attempt has been made in this opportunity analysis to define specific recreational demand but doing so prior to site selection is a critical issue for planners. Also, it is critical for planners to determine local recreational lakes that are most suitable for fishers, power boaters, canoeists and sailors, and to determine within over-arching planning guidelines which potential developments support local planning objectives and should be fostered, and which developments would conflict with local planning objectives and should be discouraged. Market AnalysisDevelopers of successful major land developments attempt to secure development product (raw land) early in the business cycle while land costs are relatively low and interest rates are at the bottom of their traditional cycles. Typically, this means optioning property in the bottom of a recession when they can secure lines of credit at low rates with confidence that rates will remain low long enough that product can be both developed and sold before they get caught in another downward economic trend. Currently, land prices generally have been under strong upward pressure due to ripple effects of an urban price boom typical of upward movement in the business cycle, and in the current environment resulting from artificially low interest rates and easy credit. Interest rates were at 50 year lows in July of 2003, although long-term interest rates began to rise in August of 2003. The resulting housing boom, both in the USA and Canada, had raised new housing construction and resale sales patterns above annual long-term highs, and, following historical cycles, new housing trends are expected to start falling. The beginning of the decline in housing sales trends is evident in many regions now. Locally, sales are beginning to indicate a slowing pattern. Interviews with local realtors in Houston and Smithers indicate the only properties that are locally holding their value are waterfront recreational lands. It was reported that American purchasers looking to hedge investments against other low interest opportunities are the main source of market demand at this time. Figure 19 shows the interest rates for the last 20 years for residential interest rates and prime business interest rates. F 
igure 19. Interest Rates for the Last 20 Years Source: Canada Mortgage and Housing Corporation It is too early to identify with accuracy when and how quickly domestic (local purchasing) housing (and land) price and sales trends will flatten and fall as this will be determined by consumer confidence, which in turn is influenced by employment confidence or fear. However, in the local market area, we are faced with serious recent employment losses and low consumer confidence while simultaneously the urban ripple effect has driven land prices upward. The recent decision by ski resort developers in Smithers to not proceed at this time is another weakening indicator. Building permit data confirms local landowners have become very conservative and new construction has already declined. Table 28 shows the building permit data for the Regional District of Bulkley-Nechako. It was impossible to isolate building permit data for the specific planning area of this study. However the Regional District of Bulkley-Nechako data is representative of the region as a whole. Table 28. Regional District of Bulkley-Nechako Building Permit Data
In order to interpret the table, one must remember permits are issued for foundations for mobile homes, installation of wood stoves and fireplaces, minor renovations, carports and roofs over mobile homes. An interview with the building inspector indicates that new home construction represents a very low portion of the permits throughout the area. This is with the exception of Vanderhoof (increased 10% over the past five years due to a mill) and Smithers (increased 1% due to speculation of ski development expansion which has now been cancelled). The building inspector speculates that in 2003 new permits will be well less than 100, the lowest number of projects undertaken in the past five years. The dichotomy of deteriorating new construction trends and high land prices is partly influenced by recent easy credit; particularly floating variable rate loans that have been at all time lows. However, as stated earlier, long term rates have just begun to rise and when interest rate increases impact short-term loans such as variable rate loans, increasing interest costs will negatively impact borrowers and land prices will destabilize to lower levels. New construction will remain at very low levels and land will be available at lower relative prices in the future. An inherent issue of real estate development is a typically long product development cycle between land purchase, development, and eventual sale. The borrowing interest holding costs can drive a project into bankruptcy if sales are delayed due to future market softness, which is currently expected. Thus, between an artificially high land cost component and the anticipation of increased interest costs, it is important to not purchase or secure lands at this point in the cycle. It is however the very time to identify potential locations and secure cooperation for specific sites from BC Lands and Water Inc., Department of Development and Marketing. Crown land can be sold to developers for recreational site developments; however, it is sold based upon current appraised land values. It is important to establish the base-line market value of the raw land at the bottom of the price curve. A table showing actual recent sales trends was not available. However, if government project partners have access to the BC Assessment Authority database, this data would be instantly available. The annual cost of the service is $600/year or, alternately, available through the BC Northern Real Estate Board in Prince George. Download 1.06 Mb. Share with your friends:
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