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Mountain High: The Rising Cost of Whistler's Residential Real Estate By Pamela Clarke As the Canadian residential real estate market flattens under pressure from rising interest rates and a lack of consumer confidence, the Whistler market continues to escalate. Sales are up, average purchase prices have risen and realtors are forecasting continued strong growth. One indicator of this was the sale of 90 units in Blackcomb Springs in just four hours on April 5. Such feverish activity is not unusual in the resort municipality. For the third time since Whistler was incorporated 20 years ago, the residential real estate market is rising towards new heights: last year, buyers plunked down an average of $182,438 for a lot, $378,792 for a single family home and $193,215 for a condominium. Strong sales in the first quarter of 1995 have laid the foundation for another record year. Sell globally, control locally "The jewel of North American ski resorts" is unique in many respects. First of all, the village's economy is closely linked to the global market: 60 per cent of hotel guests last winter were foreigners. As a result, the percentage of non-residents of Canada buying properties here is also increasing — approximately 30 per cent of condo sales are to foreigners. Secondly, residences are undervalued by international standards, particularly with the declining value of the Canuck buck. Parallels are drawn to the exorbitant cost of buying real estate in Vail or Aspen. "We're one-third the price of other North American resorts such as Aspen," says Drew Meredith, president of Whistler Real Estate Co. He doesn't think prices will ever rise to those levels, but adds "people don't appreciate how expensive it could be here." Thirdly, the market is not driven by locals. Although foreigners are buying more real estate in Whistler, the market is still driven by Canadians, primarily from the Lower Mainland, wanting a vacation home or investment property. The Resort Municipality of Whistler's first annual report, tabled in October 1994, acknowledges that "housing prices... are determined more by the ability of non-residents to pay for recreation homes than the ability of local residents to pay for their primary residence." Although the village's average per capita income is higher than the B.C. average, it is still predominantly "a middle income community struggling in a housing market driven by upper income earners from elsewhere." A final factor that makes Whistler's market unique is the dominant role played by the municipality. For the past 20 years, growth has been closely managed. Supply has been limited so prices were driven up, and development controls have preserved existing property values. The RMOW continues to maintain tight control over the design and character of village properties. Although it cannot control the style and substance of single family or duplex residences, the municipality encourages developers to prepare building schemes under the Land Title Act. A building scheme allows developers to control the type, style and form of all proposed residences in their subdivision. The only restriction imposed by the municipality is size and height. "Whistler is not just an ordinary town in B.C.," says lawyer Nicholas Davies. "We market a product." The most obvious sign of council's control of supply is the much talked about "bed unit" limit. A bed unit is "a measure of a quantity of development intended to reflect servicing and facility requirements for one person." A residential bed unit averages 27 square metres. The number of bed units was raised from 40,000 in 1982 to 45,000 in the mid-80s and hiked again in 1989 to 52,500. The most recent increase was to "round out the seasonality of the resort" and make more room for resident housing, says Mike Vance, director of planning and development for the municipality. "There's nothing in the books for another bed unit increase." "Prices go down only if too much is brought onto the market," he adds. It would also "lower the quality of the experience and we're just not going to do that." Market ceiling, local foundation Despite the best intentions of the municipality and the optimism of real estate agents, there is no guarantee that the village's real estate will continue to appreciate. Whistler is completely dependent on tourism and that makes it vulnerable to factors that can't be controlled, such as snowless winters or currency fluctuations. "Whistler's international appeal keeps the tourist numbers up which ensures jobs, and also keeps the prices going up," says Doug Mildenberger, personal banking manager, Royal Bank. "But that's not to say it (a market stall) couldn't happen here." If history does repeat itself, then the market is due for a correction in the next few years, in line with the plunges taken in 1982 and 1990. In the early ’80s the market was going strong as "there wasn't a lot of product and demand far exceeded supply," says Meredith. Then the economy sank into a deep recession and the average price of a single family home plummeted from $225,000 in 1981 to $160,000 the following year. The slide continued until 1985 when the average house price bottomed out at $120,000. House prices then turned around and climbed steadily to an average of $343,750 in 1989. The following year, another market correction occurred, driving the average price down to $275,000 in 1992. Since then, the average price of a single family home has risen to $378,792. The rate of growth has been slower in other sectors: condos cost an average of $155,000 in 1991 versus $193,215 in 1994, while building lots were priced at $150,800 four years ago, in contrast to the going rate of $182,438 last year. One way or another, there'll be a lot of winners and losers in the Whistler residential real estate market in the next few years. "It's inevitable the market will increase, and the single most important factor is the lack of supply," says Meredith. That's golden news for homeowners, but depressing stuff for other locals as the escalation may freeze them out of the market forever, leaving them in a difficult position when contemplating permanent residence in Whistler. The result is a Catch 22 situation for the municipality: how to ensure that every covenant, bylaw and building scheme has a positive impact on property values, while at the same time, guarantee that affordable housing is available to qualified residents. The demand is definitely there: over 50 people entered the first lottery for the right to purchase one of the 18 lots on Lorimer Ridge at roughly one-third of the market price. The most recent one saw 96 people competing for 11 lots. There is still not enough supply to meet local demand within Whistler's boundaries. As a result, Craig MacKenzie, former chairman of Whistler Housing Society, would like to see a subdivision for locals only developed in the Callaghan Valley, six kilometres south of Creekside. While the issue of affordable housing dominates local conversations about real estate, the topic of million dollar homes surfaces in the national media, such as the January issue of the Financial Post Magazine. Although some 20 homes valued at more than $1 million have recently been built or are under construction, only three homes have been sold for more than $1 million in the last three years. "People aren't afraid of building in Whistler anymore," says Meredith. "It's the ultimate discretionary expenditure." Whether or not the expenditure will pay off, however, is at the market's discretion.