Following the imposition of taxes on foreign investors and empty houses, Vancouver real estate has lost its crown as the craziest housing market in Canada - ceding its position to the resort town of Whistler - around two hours north.
Benchmark property prices in Whistler have surpassed Vancouver for the first time - with the average townhouse in Whistler selling for C$1 million vs. Vancouver's C$835,000, and detached homes selling for a premium of 4% over Vancouver's at C$1.67 million. The housing crunch in Whistler is so bad that businesses have taken to buying multi-million-dollar properties to house employees who can't otherwise afford to live in the popular vacation destination.
"It’s an absolute gong show,” said Russell Kling, a former hedge fund manager turned developer, whose Pangea Pod Hotel is set to open this summer aimed at delivering more affordable tourist accommodation. Whistler was the most expensive place in Canada to spend New Year’s Eve -- C$745 for a double room compared to C$414 in second-place Quebec City.
“People told us, ‘Your biggest issue will be accommodation -- if your staff can’t find accommodation, it doesn’t matter how much you pay them,’” recounts Kling, whose co-founder is his wife, Jelena. “So we took that risk off the table and purchased a home.”
The seven-bedroom residence cost “close to a couple million dollars” and will house the hotel’s general manager and a handful of key employees. The Klings even looked at buying a second staff property. “But so much of this stuff now -- forget about buying, I wouldn’t want to put my worst enemy there,” he said. -Bloomberg
While the explosion in real estate prices is mind-boggling already, the rental market is even crazier - with one recent listing for two girls to share a double room (and we presume, the one bed) at C$780 per month, each.
Many renters spend more than 50 percent of their income on housing. Mayor Wilhelm-Morden, incensed by landlords raking in cash from illegal short-term rentals, has imposed a C$1,000-a-day fine for violators, saying Whistler won’t tolerate “employees shoved out the back door” to make way for tourists. -Bloomberg
And it's not just the price of housing and rentals that's exploded in Whistler - visiting is now prohibitively expensive as well, with overnight rates during peak winter season topping anywhere else in the nation. It's become so bad in Whistler that a take-home income of $2,180 per month is barely enough to get by. As Bloomberg reports:
Phil Bonham, a 31-year-old ski patroller, has been living out of a 1984 Dodge camper van for four years, unable to afford the surging cost of housing.
Styrofoam cutouts are wedged into his windows to keep out the chill during cold snaps, when temperatures can plummet to minus 25 degrees Celsius (-15 Fahrenheit). He doesn’t bother with the propane-fired refrigerator in the tiny kitchen between the driver’s seat and bed -- nothing thaws anyway in winter, and he eats fruits and vegetables immediately before they freeze.
The small wood-burning stove in the back corner is the “hippie killer,” a reference to stoves like this that have been known to asphyxiate people in their sleep as they try to stay warm. The winter before last, he found himself lying under the van during a snow storm rebuilding pieces of the engine -- “a bit of a low point,” as he describes it. But that’s what a take-home wage of about C$2,800 ($2,180) a month after taxes buys in Whistler. -Bloomberg
“I only expected to do it for a season,” Bonham said in a Bloomberg interview in a parking lot near the ski slopes, where he identified at least seven other vehicles being used as full-time residences. “Without getting a second job or a girlfriend, there’s no way I could afford a room to myself. And I make a decent wage in comparison to many other jobs in Whistler.”
While Whistler has a permanent population of less than 12,000 residents, there are over 1,300 applicants waiting to either rent or buy homes at below-market rates in a lottery of resident-only housing managed by the Whistler Housing Authority - which aims to provide housing for at least 75% of the town's employees. Officials in December said that target "will be very challenging to continue to meet."
Putting even more upward pressure on the Whistler real estate market is its transition from a skiing mecca into a four-season destination for all sorts of outdoor activities, including golf, hiking and mountain biking.
“We’re as busy now in the summer as in the winter,” said Mark Lamming, owner of Whistler bakery, Purebread.
In order to try and explain the run up in housing costs, Mayor Nancy Wilhelm-Morden has assembled a task force to try and determine how young families can afford to live in the area - finding that "Suites that once housed local tenants are being replaced by lavish, sparsely used vacation chalets. Online home-share websites have made it easier for owners to illegally rent properties intended for residents to higher-paying tourists."
Further complicating matters is Whistler's bevy of restrictive zoning laws prevent builders from easily alleviating the crunch.
Much of the supply-side woes are also self-imposed. Canada’s first resort municipality, Whistler was purpose-built in the 1980s in the image of a pedestrian-free Swiss alpine village, and restrictive zoning and land-use rules to prevent over-development also choke supply. Meanwhile, a byzantine web of rules dictate how residences can be used in the broader community. -Bloomberg
One in three Whistler businesses could not find enough staff last year, according to the housing authority. In order to try and mitigate the problem, the town council has committed to an additional 1,000 new resident beds over the next five y4ears - however one local developer says that's less than half of what's needed.
[I]n a letter to council dated Oct. 31, local developer Steve Bayly questioned the accuracy of the RMOW assessment.
"In my view, 1,000 beds fall short of the current need. Most concerning is that 850 of the beds are predicted to come from in-fill (300) and private sector development (550) where Whistler has had little success in the past," Bayly wrote.
Further, with 2,500 new employees gained in the last five years and more growth projected, the RMOW's target of 1,000 beds, even if fully realized, may fall well short of future need.
"In my view, total additional employee beds needed to run the resort at build out may be as high as 2,500 new beds and that is before such things as future leakage and gentrification," Bayly wrote. -Pique
Two miles to the South of Whistler, Vancouver's market has softened - with residential home sales totaling 2,517 in March - a 29.7 decrease from March 2016, and 23% below the 10-year March sales average.
There were 6,542 home sales on the Multiple Listing Service® (MLS®) in Metro Vancouver during the first quarter of 2018, a 13.1 per cent decrease from the 7,527 sales over the same period last year. This represents the region’s lowest first-quarter sales total since 2013. -RE Board of Greater Vancouver
“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” Phil Moore, REBGV president said. “High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”
That said, Vancouver experienced its lowest first-quarter new listings total since 2013, which may continue to put upward pressure on prices.
“Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low,” Moore said. “Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms.”
Maybe staff-strapped Whistler businesses can chip in for a few tour buses to cart employees back and forth two hours each way from the "far more affordable" Vancouver?