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A house too far

A new study of housing prices across Canada found that the average price of a single family home had breached the $300,000 mark for the first time ever, coming in almost 13 per cent higher than the previous year.
andrewbyline

A new study of housing prices across Canada found that the average price of a single family home had breached the $300,000 mark for the first time ever, coming in almost 13 per cent higher than the previous year.

Being in the market myself – if you can really consider the Whistler Housing Authority’s inventory a ‘market’ – it was nice to know that I’m not the only Canadian about to be hitched to a mortgage I can’t really afford without making some considerable sacrifices.

B.C. has the highest housing prices in the country according to the report, with Vancouver homes selling for an average of $518,176. And Whistler, we are constantly reminded, has the highest market housing prices in the country.

The irony of it is that all the people who moved to B.C. over the years for the lifestyle will no longer afford to live it up, as paycheques go out as fast as they come in.

Some experts are crying ‘bubble!’ which basically means they believe that many homes are substantially overvalued and there’s a good chance a lot of people will wake up one day to find they’re paying a $518,176 mortgage on a home with a resale value that’s substantially less. Housing prices usually bounce back over time to ensure the homeowner at least a small profit, but nothing is guaranteed anymore as the world and economy change.

However, that hasn’t stopped people from continuing to invest heavily in property. Oil money keeps Calgary and Edmonton booming, Toronto is taking a leaf from Vancouver’s book and filling its skyline with condos, and Vancouver – people get into bidding wars over small two bedroom apartments because they’re within 20 blocks of Stanley Park.

For all the uncertainty I can understand the desire to own something. Paying rent does not build your equity, something you’ll need in this life if you ever want to retire.

Ownership also provides a measure of certainty and security. Nobody can kick you out, sell a place out from under you, or suddenly decide to hike your monthly payments (except of course for the bank that actually owns your home until it’s paid off, and mortgage rates are climbing).

Rational reasons aside, I think most people just like the idea of owning a place of their own. A home represents so many things; a nest to raise a family, a space to remake in your image, a safe place to keep your money, and, for people who are tired of moving every few years, a measure of stability.

Affordable housing in Whistler can only be maintained through a mix of concessions and incentives, but it’s becoming increasingly clear that buyers can no longer consider these properties to be a guaranteed investment. You’ll no doubt save some of the money you would otherwise be spending on rent, but in order to keep affordable housing affordable for the long term – and Whistler is all about long term thinking – it was necessary to further cap the amount that your house could grow in value each year.

From the beginning the goal of the Whistler Housing Authority has been to create affordable homes to house resort employees, insulated from the growth of the Whistler market. To accomplish that the WHA linked appreciation of housing to the Vancouver market, which traditionally has increased in smaller increments closer to inflation – about three per cent a year. Until just recently.

Now, with the Vancouver market exploding – a 24 per cent increase in the value of single family homes in the last year alone – the WHA saw the value of Whistler employee housing to be increasing too quickly to remain affordable. It was also important to protect employees buying into housing that could lose value if the Vancouver bubble bursts.

In May 2006 the WHA announced plans to apply a new standard of appreciation to resident restricted properties, basing it on the Core Consumer Price Index instead of the Vancouver market, then setting an annual growth limit of five per cent.

The CCPI measures price increases and decreases the cost of housing and cost-of-living necessities to come up with a general rate of inflation for the country.

The benefit is that the CCPI is an objective statistic, and is not as subject to market anomalies – such as increasing gas prices and the insanity of the current Vancouver housing market. As of May 18 the CCPI was up about 2.4 per cent over the past 12 months, even with a 16 per cent increase in gas prices.

There are drawbacks for new homeowners under this system, especially if mortgage rates continue to increase. By the time a home is paid for, if you pay it back slowly, its value could be less than the total cost of the house plus interest paid. Add in your annual property taxes and monthly strata fees, and most of us have some serious number crunching to do before taking the plunge into home ownership.

The only advice I can give is to meet with someone from your bank, draw up an honest budget you think you can live with, reevaluate what you can really afford to own, and then decide what’s most important to you – your house as an investment, or as a home to call your own at whatever the cost.

Sliding Centre wakeup call

The announcement that the Vancouver Organizing Committee underestimated the cost of the sliding centre – almost doubling from $55 to $99.9 million – came as a surprise for many of us.

We have been warned to expect cost increases as a result of the increased cost of construction materials and labour, and to be fair VANOC has done what they can to mitigate or streamline costs to compensate for those increases.

I also applaud VANOC’s recent decision to release quarterly reports to improve the transparency of organizing efforts and keep the public up to date on the financials of hosting the Games.

But what wasn’t as clear to the public during the initial planning stages was that the bid corporation wasn’t allowed to project any cost increases in their original bid, and that all 2010 Olympic facilities were priced in 2002 dollars. Even with modest inflation our costs were always expected to go up.

Regular updates should prevent any more unpleasant surprises down the road, but in the case of the sliding centre it doesn’t do much to cushion the blow. Maybe we should have demanded this kind of transparency from the beginning.