Homes are the new paper

Mill is no longer the catalyst for local real estate values

BY PIETA WOOLLEY

For more than 100 years, the Powell River Paper Mill has lured workers here from all over the world, with the promise of well-paid, stable work and home ownership: immigrants from starving countries after World War I and II, Canadians and Americans during the tough years of the Depression. Because of the mill – and the surging international demand for newsprint – qathet was buffered from the 20 th century’s worst global economic shocks.

Those global shocks are catching up with us. For the past 11 months, Powell River’s paper mill has been largely silent, curtailed by the company that owns it, Paper Excellence. Of the eight mills the manufacturer owns in Canada, four were paused in the past year: Mackenzie, Crofton, Northern Pulp in Nova Scotia, and Powell River.

In early March, the company announced that our mill would start up again in May, but with a reduced workforce: of the 360 jobs – which paid an average of $75,000 a year, more than double the median income here – 160 are not yet being called back.

In the mill’s 110-year history, 200 jobs is the lowest number it has ever offered. At the same time, demand for housing here is surging, at record-setting prices. In other words, what would normally be a significant economic shock to this town is masked because real estate is the new mill – the centre of this region’s economic vitality. For those thinking about selling, this is your time.

“I guess it’s a bit of good news and a bit of bad news,” said Neil Frost, the president of the Powell River Sunshine Coast Real Estate Board, who has been selling homes here since the market meltdown of 2008.

“In general there are 200 good paying jobs that are not leaving this town. On the other side, lots of under-40s have come to Powell River to work for Catalyst in the last few years and have bought homes.”

In other eras, if the mill had cut its workforce by more than a third, the change would have rocked this region. But Neil doesn’t think Paper Excellence’s move will dampen the fiery demand for local homes, or cool prices. More than half of buyers are from out of town; 70 percent were, in January. Demand for homes here is becoming untethered from local jobs, as retirees and telecommuters evacuate bigger cities.

For at least eight years, BC’s real estate industry has been the province’s most important economic driver, above mining, technology, forestry and transportation. Vice Magazine even pointed out in a 2017 headline “Real estate in BC is more important than oil to Alberta.” Even the economically-libertarian Fraser Institute issued what seemed like a warning in December 2020, about the lack of relationship between industry and incomes and real estate in this province.

There was a relationship between local workers, such as these sawmill employees after WWII, and these Maple Avenue homes.

Photos courtesy of the Powell River Historical Museum & Archives

“The province’s heavy reliance on residential housing as its driver of economic growth has made for an industrially unbalanced growth dynamic,” wrote resident scholar Steve Globerman.

“Hence, any future downturn in the residential housing sector would have a particularly marked adverse effect on the BC economy. Furthermore, the fact that capital investment in productivity-enhancing assets such as machinery and equipment and intellectual property in the province lagged behind such investment in the rest of Canada, on average, suggests that the competitiveness of non-real-estate-related industries in British Columbia will be at a growing disadvantage compared to other parts of the country in the years ahead.”

There was a relationship between local workers, such as these sawmill employees after WWII, and these Maple Avenue homes.Photos courtesy of the Powell River Historical Museum & Archives

In other words, BC is hooked on real estate. That's still a relatively new dynamic her in qathet.

Part of the answer, of course, is attracting more and higher-paying industries here, to balance the economy and ensure that local wages can buy local homes.

Neil is troubled that people working in the biggest industry locally, the service sector, can no longer afford to buy here. But he also notes that many of the first-time homebuyers he sees are able to save that five percent down-payment. On a modest home of $300,000 for example, that down-payment is $15,000.

He also notes that high home prices mean there hasn’t been a foreclosure in qathet in a long time. If someone gets into trouble with their mortgage payments, they can just sell. He doesn’t see strong home prices here letting up anytime soon – no matter what the mill does.

“If demand never drops in Vancouver or Squamish, it will never let up here,” Neil said. “The demand here is skyhigh, and inventory is so low. We probably do need more land released [by the City and Regional District] to build sub-divisions. " If I had an extra 100 homes here right now I could sell them."