Rebuilding Aids Canada Town Scorched by Wildfires

By Jen Skerritt and Robert Tuttle | June 23, 2016

After shuttering his lumber mill for nearly a month when it was surrounded by raging fires in northern Alberta, Northland Forest Products Ltd. President Howard Ewashko sees a silver lining: a pickup in business from rebuilding what was lost.

“It certainly helps to have a solid market to sell into when you’ve gone through something like this,” Ewashko said in a telephone interview. “It certainly helps when you know you can make a bit of money at the end.”

Thousands of buildings were destroyed and entire neighborhoods burned to the ground in Fort McMurray, the gateway to the Canadian oil sands, as wildfires ripped across an area more than seven times bigger than New York City last month. The most expensive natural disaster in Alberta’s history is now expected to help boost a local real-estate market that recently hit a 20-year low after scores of workers lost their jobs in the energy industry.

“It’s going to be kind of hustle and bustle here over the next year or two,” Lynn Edwards, president of the Fort McMurray Real Estate Board, said in a phone interview from the city.

Houses were sold even during the evacuation period and offers have been coming in during the past week, Edwards said. There are fewer than 600 currently for sale, down from 830 listings in the city at the end of April, she said, adding that more accurate figures won’t be available for several weeks.
Accommodation Shortage

“There is a shortage of accommodations in Fort McMurray right now,” Ben Dutton, chief executive officer of Fort McMurray-based construction firm Casman Group of Companies said in a telephone interview. “The hotels are maxed.”

The city is going to need to find temporary housing for people displaced by the fire in addition to insurance adjusters and contractors involved in the rebuild, Dutton said. There will probably be upward pressure on prices due to limited supplies as some out-of-town builders see the city’s housing market as an opportunity, he said.

The fire hit at a time when a wave of foreclosures was expected in Fort McMurray because of the oil industry downturn, Dutton said. There were only 193 housing starts in 2015 and just a single start in April, compared with 2,175 single and multi-family homes that broke ground in 2007, according to a May 9 report from the Canadian Home Builders Association.

Economic Boost

Early estimates suggest that 2,400 buildings were damaged or destroyed in Fort McMurray, including 1,600 private dwellings, and rebuild efforts may provide a C$1.3 billion boost to Alberta’s economy in 2017, according to the Conference Board of Canada. While most of the community’s public buildings were saved from the fire, the city will need additional money to repair and rebuild roads and other infrastructure, and construction will probably remain elevated until 2018 and 2019, the Conference Board said.

“We anticipate there’s a lot of spending that will occur as people rebuild their lives,” Russell Dauk, vice-president of land and commercial for Edmonton-based homebuilder Rohit Group of Companies, said in a telephone interview.

A slowdown in housing in Calgary and Edmonton means there will be an available supply of contractors to work in Fort McMurray, Dauk said. Rebuilding efforts are unlikely to start before August and builders are still waiting to hear how or if the construction will be coordinated, he said.

‘Massive Undertaking’

Homeowners are already phoning for information as they assess damage with their insurers, said John Dawson, a retail manager for the Fort McMurray area at Qualico, a Winnipeg-based home builder.

“I can tell you it’s a massive undertaking,” Dawson said in a telephone interview. “I have no predictions how long it’s going to take.”

The municipality still has to decide whether to rebuild homes in the same area or move them to other serviced lots in Fort McMurray that are ready to go for new construction, said Jim Rivait, chief executive officer of Alberta’s chapter of the Canadian Home Builders’ Association.

“There’s complete communities that have to be rebuilt,” Rivait said. “It could take a while.”

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