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Feature - Living space; the final frontier

House hunting in the Sea to Sky corridor

If you live in Whistler you’ve heard the stories about people becoming millionaires overnight simply because they bought a shabbily built A-frame cabin 15 years ago.

Then again, you’ve also heard the stories about the people who’ve left this utopia because they just can’t afford to live in their million-dollar homes any longer.

For the rest of us, the people who got here too late, who work the jobs that keep this community alive, who have fallen in love with this special place, there’s a growing sense that we’ve missed out on something big and we’re never going to be a part of it.

While we may think we’re destined to live in Whistler, breathing that fresh mountain air, we might never be able to afford a home here or have a place to call our own.

I’m now at that time in my life when the once dreaded words of "settling down" have a really nice ring to them.

I’m in my late-20s, in a serious relationship and my last big purchase was a crock-pot for crying out loud.

So to put the myths to rest, to see what’s really out there, I joined some real estate agents to check out my options in the Sea to Sky corridor.

Just to make the math easy for this article, I’m using a combined income of $100,000 as a starting point. My boyfriend and I don't make this much money and neither does the average family in Whistler.

According to a municipal discussion brief on provincial school taxes, the median family income in Whistler is $52,848. Interestingly that average is lower than the provincial average by about $4,000.

But $100,000 has a nice ring to it, don’t you think? And it’s fun to make-believe for a little while.

Here’s what I found.

You want to live in it?

I was something of an anomaly to real estate agent Jason Kawaguchi. Only one of every 10 people he deals with at Whistler Real Estate is looking for a piece of property as their primary residence.

"The others are looking for varying degrees of recreation and investment property," he said.

Some of those people are at computer screens around the world, buying homes or condos over the Internet, site unseen.

For a first-time buyer like myself however, this step is one of the biggest and most emotional journeys in their life. It’s finding that perfect place to call their own and turn it into a home.

Kawaguchi set me straight right away.

"There's no such thing as a starter house in Whistler," he cautioned.

"You can't buy a single family home for less than $750,000."

This wasn't news to me. But somehow when a real estate agent tells you point blank that the dream of the white picket fence is totally out of your reach, the reality of Whistler's unique situation takes on a whole new meaning.

Kawaguchi recommended I speak to a mortgage broker before taking me on a tour of the Whistler properties in my price range. It's the same advice he would give any first-time buyer.

And the suggestion filled me with dread.

Financial limits

Going to visit a mortgage broker for a full disclosure of my personal net worth sounded about as appealing as standing naked on a stage before a panel of judges. I had visions of disapproving stares and head-shaking tuts as the broker pored over my credit history, my assets and my little savings account with a fine-tooth comb, judging me accordingly.

That was before I met Karen Garrett at Garibaldi Mortgage.

Garrett has seen the whole gamut of buyer’s walk through her door in the offices above 7-Eleven.

She has dealt with everyone from multi-millionaire investors to anxious first-time homeowners.

As a mortgage broker she acts as the mediator between prospective clients and the financial institutions who are putting their money on the line. She’ll continually massage deals, working out different financing scenarios, until both sides are happy.

Along with her laid-back attitude, one of the first things she said put me totally at ease.

"Generally speaking it's rare that I have to say 100 per cent no," adding that in her three years at Garibaldi Mortgage she's only had to decline mortgages for one or two people.

"Come hell or high water there's some kind of financing for you."

That was reassuring news.

There will be problems however if you don’t have any job security or if you have a negative net worth or if you have bad credit, she said.

People who are applying for a mortgage for the first time are most concerned about that dreaded credit check.

Understandably any financial institution that is considering giving you a whack of money will ask for a credit report from the local credit bureau.

The report shows any past credit activity, including things like loans, lines of credit, collections and bankruptcies. As it turns out the bureau has a very vivid memory, recalling all your credit activity for the past seven years. The bureau remembers the times when you couldn't make your car payments or when you were having difficulties paying Visa during your days as a struggling student.

Then you’re given a credit rating from zero to nine (zero is an inactive account, nine is bad debt.) The best rating is one.

Garrett said it’s best to lay it all on the line with your broker from the get-go. It might be embarrassing. It might seem that the best thing to do is to sweep past dubious credit behaviour under the rug and simply hope for the best. But she recommends being up front and honest. It will only help you in the long run she said.

After the credit check is sorted out the broker will work out what kind of a mortgage you can afford.

The general rule of thumb is that 32 per cent of your income can be used towards your home.

So with our magical income of $100,000 we can get a mortgage of $400,000. This was way more than we ever would have imagined – part of the beauty of make-believe scenarios.

With our combined wage we would be taking in about $8,333 each month. This is wages before taxes. Remember, the bank does its calculations on pre-tax income.

Thirty-two per cent of that before-tax wage would make our monthly mortgage payment roughly $2,666, which takes into account our heating bills, strata fees and property taxes, because the bank also looks at your ability to pay those things too.

Currently Garrett can get us a five-year mortgage at a fixed rate of 5.3 per cent interest, over a 25-year amortization period.

In layman’s terms that means for the next five years we would pay $2,395.20 every month (plus heat, strata fees and taxes). And at the end of the five years we would renegotiate our mortgage.

In that scenario we would pay over $1,700 in interest and less than $650 off the principal every month. At the end of five years we would have paid over $99,000 in interest and $44,000 in principal.

Since we don’t actually have $400,000, we’re somewhat stuck between a rock and a hard place. We need the bank’s money and they’re going to charge us for using their money accordingly.

Although it may seem like an astronomical amount to pay in interest, believe it or not the rates are actually quite low at the moment. Garrett said the prime rate has continued to drop over the last three years and we are currently in a trough of low rates.

"Now is a great time to buy," she said.

Buyers can chose to have a variable interest rate over the fixed rate. The variable rate moves up and down with prime, so Garrett cautions that the buyer must be comfortable with the volatility of the rate. But if the interest rates remain low, a variable rate could help bring down the principal.

There are more options to lower your principal. Most banks will allow you to make up to 10 to 20 per cent lump sum payments once a year that go straight against the principal. And you can also choose to make bi-weekly accelerated payments, which means you would make an extra payment every year. Instead of making 12 payments a year, you would make 13 – a technique that can take years off mortgage payments and more importantly, save thousands of dollars in interest.

Now that we’ve figured out our mortgage, the next major hurdle to think about is the down payment.

If we go with a conventional mortgage then we need at least 25 per cent for our down payment, or the terrifyingly huge amount of $100,000.

Or we could go with a high ratio mortgage, which would be insured through the Canada Mortgage & Housing Corporation. Through CMHC we could buy a home with "as little as five per cent down" or $20,000.

But if you buy anything over $250,000 you must put down 10 per cent.

Garrett said the down payment could come from any savings, stocks, bonds, mutual funds or other investments.

When I looked at her blankly and in despair, she mentioned another option.

Nowadays a lot of first-time buyers are getting a pre-inheritance from their folks. As more baby boomers are starting to retire, they're "gifting" their money to their kids.

Finally, a light at the end of the tunnel.

The Bank of Dad

"Hey dad," I said, calling his office in Toronto.

"Ever heard of this thing called a pre-inheritance... how much am I good for?"

There was a long sigh. I'm surprised he didn't launch into a diatribe of my selfishness and lack of responsibility right off the bat. I can only imagine that he's been mentally preparing himself for this phone call for quite a while.

I explained the situation.

As I knew he would, my dad launched into a story about buying his first house. It was a little bungalow in Toronto. My parents knew they wanted three bedrooms, a backyard and a fireplace because this was going to be their home primarily, rather than an investment. As it happened, it also turned out to be a good investment too.

"You’re in a very tough market for a buyer who wants their house to be a home for a family," he said.

He said it’s going to get harder and more expensive in recreational places like Whistler as the baby boomers move out of the city and into the country to retire.

Without giving me a hard dollar figure, dad said he was good for some cash.

"If you can see your way to affording it, then buy something," he said, adding that I have to believe that I’m going to continually improve on my ability to make more money.

"Yeah, but dad, I don't think we’re going to get much bang for our bucks here in Whistler."

"It doesn't matter what you get Alison because the truth of the matter is you can't afford anything else."

The man has a point, I suppose.

And so, somewhat confused and overwhelmed with the dollar figures I was casually throwing around, I hit the road with Jason Kawaguchi on an overcast Friday morning about three weeks ago just to see what I could get in Whistler for $400,000 or less.

As it turns out, we can’t get much.

Whistler under $400,000

Our first stop was at a one-bedroom condo in Tamarisk.

South of Creekside, Tamarisk is on 22 acres of land and is one of Whistler’s original ski complexes.

"You might have spent the night here but for the most part no one ever stayed up here before," he said.

"They’re not really designed around living."

Like any good agent, Kawaguchi talked about the south facing windows, which give the apartment good sun exposure. He talked about the wood-burning fireplace, the communal swimming pool and tennis court, the proximity to Alpha Lake and the recreation room complete with pool table.

The complex has 140 units, although you would never guess that with the empty parking lot at the front. Many owners do not live in Tamarisk year-round, which means the place is quite quiet most of the time.

The newly listed condo we looked at was 650 square feet.

Most of these places were built with saunas originally and Kawaguchi said many people knock through the sauna walls to make their small bathrooms or tiny kitchens just a little bit bigger.

This being the first place I saw I tried not to let my jaw drop when Kawaguchi said it was on the market for $275,000. Trying to rationalize the price I asked how the same apartment would compare in downtown Vancouver or Toronto. A one-bedroom in Vancouver would be between $150,000 and $175,000 he said, and Toronto would be a little more expensive.

The property taxes on the apartment would be just over $1,000 a year and there are also monthly strata fees of $175.

Barring a studio apartment at Highland Lodge, this apartment was the cheapest thing on the market.

I was starting to get an inkling now of the what we could afford for $400,000 and less. Or more particularly, what we couldn’t afford.

Kawaguchi has since told me that there is currently an offer on the apartment. It was on the market for less than a month.

We ploughed on to our next appointment in Creekside.

If I thought Tamarisk was small for the asking price, I was almost bowled over by the price of Gondola Village. This one-bedroom apartment in the multi-coloured units behind Food Plus really took my breath away. It was 396 square feet, overlooking Highway 99 for $289,000.

My first thought was how could anyone possibly cook a meal in this place. I don’t profess to be a gourmet cook in the kitchen but this place had a mini version of a sink and a stove. It had a bar fridge and less than a foot of counter space.

This was not the place for expansive dinner parties.

Gondola Village was built in the mid-80s. Like Tamarisk the apartments were not designed around full-time living.

"It was built as a weekender place," said Kawaguchi.

Despite its size there was one main attraction to this property. It’s zoned a Phase 1 property. This means owners have the choice to rent it nightly LEGALLY. Kawaguchi guessed that this place could fetch about $150 a night. This could go a long way to paying off a big mortgage... if we weren’t actually planning on living there.

Now two weeks later Kawaguchi tells me this place is still on the market. But another one in the same style has just had an offer on it.

We continued north to Alta Vista and a two-bedroom condo on Hillcrest Drive.

I liked this place. Like the others it was still small too at 565 square feet.

But the complex, which was built in 1996, won a design award for compact living space. This place didn’t feel small. The kitchen was practically palatial compared to the first two condos and there was a nice deck overlooking the Valley Trail.

Both bedrooms were small but one could be used as an office or a spare room for friends and family. Or a more likely scenario, it could be rented out for $500 a month as our own personal little mortgage helper.

Oh dear, it was happening. I was already picturing myself in this place. Our coffee table could go here, our TV there, our books along the wall, our BBQ on the porch. We don’t have anything else so we could use our sleeping bags as temporary couches along with our mountain bikes. Perhaps our snowboards could act as a dining room table for the time being.

Spinning around the living room I realized that I had lost all sense of the Canadian dollar. I forgot I was using a make-believe income of $100,000 and was actually considering all my options to come up with $359,000 for this small condo. It was quite a bold thought really when you consider my personal net worth.

It was best for me to make this stop a really short one, less I start negotiations with my dad immediately.

Kawaguchi said since I last saw this place it has had an offer on it which didn’t go through.

We moved on to the last place at Alpine House, the units to the left of McKeever’s in Alpine. This complex was built in 1974.

It was the only two-storey unit on our tour. At 830 square feet, this unit was bigger than the other places in actual square footage. But it also seemed bigger than the rest because the living space was separated by two floors.

It was while I was walking through Alpine House that I finally started to think of the home as an investment. I asked Kawaguchi if I paid the asking price of $369,000 for this condo right now and held onto it for a few years, could it every reach the half-million dollar mark? Was it conceivable to expect this 830 square foot condo could reach prices any higher than the current asking prices?

"You have to look around on a worldwide scale," he said.

"It’s perceived value. At some point it does top out. Where that point is we can’t say.

"If there’s a lot of people looking at it now, chances are there’s still going to be a lot of people looking at it later."

As much as I like to play blackjack, I was hesitant to start gambling with a lot of money that wasn’t really my own.

"It’s not a gamble," he said.

"You have to look at what it does for you at the time."

The owners have since reduced the price at Alpine House to $349,000. It has been listed for about one month.

I had mixed feelings after our little jaunt around town. On the one hand, I had more of an appreciation of what you can get for your money in Whistler. On the other hand, everything seemed so expensive, so small and so out of reach, all at the same time.

I think Kawaguchi could sense the mixed emotions.

"If you NEED two bedrooms and you NEED it for under $250,000, then you have to go north or south," said Kawaguchi.

There it was. The straight goods.

North of Whistler

If you don’t live in Pemberton, then there are very few reasons why you would embark on the 25-minute cruisey drive north to Whistler’s peaceful bedroom community. Simply put, there’s not much there... on the surface of things.

Where Whistler is action-packed and busy, Pemberton is sleepy and mellow.

You really get a sense of being in a small community when you drive around town with local real estate agent Marge McPhee as she waves to people in passing cars on a quiet Saturday morning. Horses graze in the nearby fields, next to Pemberton’s main claim to fame: it’s the seed potato capital in Canada. Welcome to farm-country and a different way of life. But underneath its sleepy exterior there’s a bustling energy and a thriving community.

The 1,800-person strong town is defined in part by its relationship to Whistler. Many people who live there, work in the resort.

"Pemberton has been the affordable alternative to Whistler," said McPhee who made the move from Whistler eight years ago.

"(But) once you spend a bit of time here and you experience this place, it has a flavour that’s appealing."

McPhee said more people are choosing to live in Pemberton because of that flavour and not simply because Whistler is out of their price league.

But if Saturday’s tour of Pemberton is anything to go by, the real estate market there is somewhat similar to the market in Whistler when you’re in the $400,000 or less price range.

Single family homes are really out of the question.

Our first stop on the tour was at the only single family home in my price constraints at $380,000. It was a three-bedroom chalet on Aspen Boulevard, built last year.

"This is the least expensive house in Pemberton in terms of single family homes," said McPhee.

"There’s been a lot of activity in the last year. Prices have really gone up."

And so with the single family home pretty much out of the question, the next best thing to look at in Pemberton is the townhouse.

That is the major difference between the two markets.

Instead of the 500 square foot condo in Whistler, in Pemberton you can get a townhouse, which is three times the size.

Pemberton is townhouses, most of which have been built in the last six years.

There’s Cottonwood, Creekside, Monte Vale, the Peaks, Chelsea Place, Mountain View Manor. And there are potentially more townhouse developments on the horizon.

There are great things to say about all the townhouse complexes I toured.

In Creekside you can get a 1,429 square foot three-bedroom townhouse, backing onto a creek where the salmon spawn for $295,000.

Six years ago when the development was first built most of the homes sold for about $100,000 less than what people are asking for them today.

Down the road at the Mountain Trails complex there was a one and a half bedroom apartment-style townhouse on the market for $189,900.

It’s an open concept, 857 square foot unit.

"This is the entry level," said McPhee.

The final townhouse tour was in a two-bedroom, two-bathroom unit in the Peaks. The 1,066 square foot, two-bedroom unit in the Peaks was on the market for $269,000.

Built in 1998, the units in this complex usually sell for a little higher than at the Creekside complex.

All in all, Pemberton seems like a nice place to live. And when you look at what you can live in there compared to Whistler, it makes for a compelling argument for a mere 25-minute commute.

Squamish takes off

While Pemberton has mimicked the upward curve of the Whistler market to a lesser degree, the real estate market in Squamish has taken a path unto itself.

Veteran real estate agent Dorothy Swanson at Black Tusk Realty says the current market in the traditional logging town south of Whistler is "mind boggling."

"I’ve been a realtor for 17 years in Squamish and I’ve never seen this," she said.

She is talking about the price jump just in the last month in the Squamish market.

"The only place that you can buy a starter home is in Valley Cliffe," she said.

Those homes are all about 25 years old. Places that sold for $170,000 a year ago, have risen over $30,000. Now there’s nothing in Valley Cliffe under $200,000.

It’s been a dramatic shift for this mill town of 16,000 people.

One year ago there were no buyers out there. "Our economy was bad, our attitude was bad," said Swanson.

Now property is selling like hotcakes. As soon as it’s listed, it’s snapped up.

Whereas Swanson had 41 listings personally last January, there are now 71 listings in Squamish as a whole, ranging from $70,000 to just under $1-million.

Among her many examples of the complete turnaround in the Squamish market are the apartments at the Diamond Head complex in Garibaldi Estates, opposite Extra Foods. Those units originally sold in the $125,000 range. Swanson said owners have been losing money in that complex for the last nine years. Now, sellers are getting the original prices of those units if not more.

She said Squamish has finally come into its own. The old attitude that Squamish is a redneck backwater logging town has been replaced by the idea that this place is on the cusp of something big, she said. And while that 45-minute drive south of the resort can be stomach-churning at times, there is a new $600 million highway upgrade on the horizon.

"There’s a lot of Americans buying on spec right now because of the Olympics," said Swanson, adding that a house will come onto the market and right away it has four different offers.

Buyers are also coming from Whistler as property owners here cash out on their $800,000 homes in the resort to live mortgage free in a Squamish home worth half the price.

There are also a lot of first time buyers because the interest rates are so good.

Swanson says there are a number of factors for this complete turnaround.

There’s the promise of a new university above the Highlands. There are two new golf courses on the horizon. And there’s also the potential of a new ski hill.

Likewise since the November elections, there is a general feeling that Squamish council has become much more progressive. Whereas downtown Squamish once had a reputation for being run down, now there’s a vision out there of a funky new waterfront section of town.

Driving up to the homes in the Highlands, Swanson points out a moderate home on the right-hand side of the road. Last year this 1,100 square foot rancher on a busy street could not sell at $179,000. It was just sold for $225,000.

One townhouse at Highland Glen was listed on Friday and was sold the following day.

"They’re in high demand," she said.

"All of a sudden investors are buying up our townhouses.

"It’s a very interesting time to be living in Squamish."

It doesn’t matter if the places are in what was once perceived to be a bad area of Squamish. It seems like people are scrambling to get a piece of the pie, no matter where it is or how big or small. Get ready to pounce on any option in Squamish.

The WHA alternative

So what are the options after exploring the real estate in the corridor? Well, there are the small expensive condos in Whistler. There are the bigger, townhouses in Pemberton if we’re willing to move out of town. And with an even longer commute to Squamish we would be lucky to get anything that comes of the market.

Even with all that was out there in the corridor, and all the personal choices to think about, there was still one more option to explore. Employee restricted housing.

And apparently we’re one of the few who haven’t taken a visit to the Whistler Housing Authority recently.

"Not a day goes by without somebody coming in," said Tim Wake, general manager of the WHA, located in a little trailer in the parking lot opposite Milestone’s.

True enough, a lot of those people are just coming in to ask questions and not actually add their names to the 250-strong master waitlist for restricted housing. But it shows that the demand is out there for this housing.

Wake guesses that some of these people have been living in Whistler, always hoping to play the real estate game, and more recently realizing that they may have missed the boat.

"They’ve finally come to terms with the fact that this is one of the best options for them," he said.

The WHA has more than 500 units of employee restricted ownership housing in Whistler, in 22 different projects dotted around town. Roughly 1,500 employees are housed in the units, which range from one-, two- or three-bedroom apartments to duplexes and single family homes.

A one-bedroom unit runs up to $135,000 for 765 square feet. A three-bedroom unit costs between $195,000 and $270,000 for 1,150 to 1,680 square feet. And a single family is upwards of $375,000.

This type of housing gives employees the chance to buy a place at a reasonable rate in a market, which has spun out of control over the past decade.

"We’re capping it relative to a market here that is crazy," said Wake.

But the housing isn’t totally capped. It’s attached to the Vancouver Real Estate Board index, which is a true indicator of the value of housing, said Wake. It is the benchmark for the entire GVRD.

Wake uses the analogy of a Whistler restricted unit and that same unit on the free market in Burnaby. If both were bought at the same price today, they would probably sell for the same price in 10 years.

The Beaver Flats duplexes in Creekside were occupied less than two years ago but when one sold last month it had gone up by about eight per cent. Wake cautions that may not happen all the time.

"What we’re offering is an ownership opportunity, not an investment vehicle," he said.

"This is not the same thing as market housing."

About 25 units turn over each year. And the waitlists can be up to three years, depending on turnover and what becomes available.

"Certainly for some there’s frustration but there’s an increasing sense of confidence that if they’re patient then it’ll work out," said Wake.

"The important thing is that you’re on the list, not where you are on it."

To get on the list you must be pre-approved for a mortgage and have the ability to write the cheque for the down payment as soon as the opportunity presents itself, because these things just don’t wait around.

Wake said: "When you get the chance to step up to the plate and take a swing, you have to be able to do it."

Houseless and confused

To tell you the truth, I’m now more confused than ever about what I want to do. While there are some real enticements to buy something right now and to start "nesting" there are some days when the thought of packing up, slinging on my backpack and trading in my snowboard for surfboard seems just as appealing as "settling down."