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First Person:

Pat Kelly

Like many others who settled in Whistler, Pat Kelly’s story begins with a temporary ski stint here just to figure things out.

The year was 1980. He had just graduated from university in Vancouver. And he had a degree in real estate law and finance.

Little did he know that a job as a Christmas party bartender for one of Whistler’s three real estate companies would set the stage for the next 23 years.

Kelly has been a Whistler real estate agent since 1980. Two years ago he became the sole owner of The Whistler Real Estate Company Ltd. Over the last 23 years he’s observed the Whistler market closely, and has strong opinions about it.

He’s adamant that Whistler cannot be a world-class ski resort and still have house prices on par with a typical Canadian town of 10,000 people.

"If you want this then you have to accept that," he says.

The President of Whistler Real Estate spoke candidly to the Pique about the recent property assessments, expanding the valley beyond the Official Community Plan and the community’s misconception of so-called "trophy homes."

Pique: The recent municipal election has shone a bright light on the housing situation in Whistler, a situation in which more and more people are moving away because they can no longer afford to live here. Why is this such a contentious issue?

Kelly: I think this is a contentious issue because of our history. We’ve grown very rapidly from a very small town of 1,500 people when I arrived here to a town of 10,000 people, which in most people’s minds is still a small town. And yet, the town itself is a world class ski resort, which is driven by forces outside of the town. For most of us our concept of a small town is that it’s affordable and it’s an easy thing to be a part of and you know your neighbours. We’re not there. We’re what we wanted to become and there’s had to be a tradeoff, which some people have not been comfortable with. On top of that, the cost of real estate and the cost of living here has gone up far faster than incomes have and so some people have been left behind in terms of the economic model. It’s disappointing to be part of something as exciting as this and realize that you’ve been left behind by forces that are out of your control.

Also, I think over the years that I’ve been here there seems to be this expectation that you should be able to live right next door to where you work… but I’m not sure that’s reality anywhere so why would it be reality here? It’s almost like a sense of entitlement that we’ve grown up with that we should be able to live right next door to the mountains. I guess 25 years ago we could. But 25 years ago we didn’t have two mountains, 15 hotels and 40 restaurants and all of the things that we do have, so things change. To try to be what we were and what we are at the same time is impossible.

Pique: There is a perception in the community that "trophy homes" are contributing to the high real estate prices. Would you agree?

Kelly: No. I think we need to be clear on what "trophy homes" mean. I think it’s being used as a very emotional way to refer to an issue in order to get a rise out of people who don’t fully understand the marketplace. If we’re talking about size, that’s homes over 5,000 square feet or larger, then it’s a very, very small part of the marketplace and there are very few transactions that occur in that area. If we’re talking about price, then what price level are we talking about? If we’re talking about homes over $5 million, again there are very few of those. The predominant housing form in Whistler is condominium and townhouse. The average price of a transaction that occurred in Whistler in the last year was $610,000 and 85 to 90 per cent of the transactions that occurred were under $1.5 million. So the "trophy home" connotation is misleading and isn’t addressing the issue.

Pique: What about the large, expensive homes that are standing empty for large parts of the year?

Kelly: I don’t disagree that some of those homes sit empty. But we’re not talking about real estate then. We’re talking about social injustice. If the people that bought that home want to let it stand empty, it’s their right. Is that good for the community? Those people still come to spend a lot of money here.

It’s a matter of choice. There are large homes everywhere. People expect to have choices. I’m not aware of this issue being discussed in Vancouver. I’m not aware of it being discussed in West Vancouver. Nobody seems to be concerned about it in Pemberton and Squamish.

I think real estate has become an easy target for the overall cost of the experience here. It’s easy to blame real estate because it’s the most obvious one and it’s the one that catches everybody’s ear when they hear the million-dollar word.

Pique: So if trophy homes are not part of the problem, why is the Whistler real estate market so expensive?

Kelly: The root cause of high real estate prices is the fact that the values and the prices are set by economic forces outside of the community. They are determined by worldwide valuations, they are determined by worldwide incomes, they are determined by the 85 per cent of people that don’t live here and their income levels and their perception of value has nothing to do with what the local community can afford for housing. And they perceive that Whistler, at $1.5-million, is very good value. So at the end of the day the trophy home thing is a huge misdirection. What drives the high real estate prices is the fact that there’s an awful lot of people who don’t work here, who don’t make their money here, and have a lot of wealth and really think this is a great place to be. They drive the prices.

The price of real estate here is a symptom. It is not the cause. The price of homes is a function of the market based on supply and demand. So, if you wonder why prices are high it is because we have spent millions and millions of dollars encouraging people to come to the number one ski resort in the world because it has the best skiing, it has the best natural amenities, it has the best restaurants, it has the best bars, it’s the most fun for you and your family. And then we’ve said: but we only have enough room for so many people. We’re not going to make it any bigger. Ultimately those people that really want to be here will pay more to be here. That obviously means that those people who can’t pay have to go somewhere else. So the people that get left behind are unfortunately the people whose incomes are dependent on the service industry because the prices of everything are going up faster than their incomes are. Their incomes don’t allow them to compete in the marketplace.

Pique: It seems a little unfair.

Kelly: Well, it is unfair. It’s also the truth. That’s just the way the world works. It would be nice to think that we could determine the housing prices here based on the local economy and the local industries, but we can’t. We wouldn’t be the resort that we are if that were true. Some people would like to believe that for $12 an hour, they should be able to live in Whistler Cay Heights. Well, if that were true then this community would be about five times the size it is, and we decided not to go that way.

Pique: Are we going to lose this vital sense of community when people start leaving?

Kelly: It’s already happening. For those that say we’ve got to protect something, we better make sure the horse hasn’t already left the barn. While this community tries to resolve the housing situation, people are making homes in Squamish and Pemberton.

It is important to have a sense of community in your resort. But I don’t know if we can determine who that community is going to be. It could be the second homeowner coming from Vancouver.

The kids of the ski patrol may not live here but that doesn’t mean that there won’t be some form of a community. It’ll just be a different form of community than what we’ve had over the last 15 years. It doesn’t mean that there won’t be any culture because there will always be people here that want to have plays and concerts and all that sort of stuff. It just may not be us. It’s going to change to a different kind of community with new kinds of people.

There has to be an acceptance of what is. We are a world class ski resort. We are not a small town in the Interior of B.C. And with that position we have decided that we want to be the number one ski resort in North America. We have to accept that some things will be impacted by that goal.

Pique: Is one answer to subsidize more housing in Whistler in order to stop this drain "down valley?"

Kelly: I don’t think we should and I don’t think we can. I think we should accept the fact that we are what we are and the people that really want to live here will live here. We should look at the area as a regional area with Whistler as a centrepiece and accept that we can’t be all things to all people. People will commute from Squamish and people will commute from Pemberton.

There has to be some recognition of the economic reality of the cost of that housing and that if somebody is going to put money in, they expect something back. The actual cost to provide a simple two-bedroom condominium is probably in the neighbourhood of $300,000 to $400,000. That’s the cost. So that isn’t affordable to start with. The level of subsidy is so huge you can’t ask business people, who are already working on pretty small margins, or the taxpayer to pay for it.

The whole concept of subsidies is necessary because we don’t want to make the valley any bigger.

Pique: So do you think we should revisit the Official Community Plan, which essentially constrains the size of the valley, and maybe think about expanding this tax base?

Kelly: The OCP was a very important planning tool. But if we’re going to talk about new taxes and we’re going to talk about subsidies for housing and we’re going to talk about basically revenue-driven solutions, then why wouldn’t we look at the tax base and whether or not we should be expanding the absolute size of the tax base? As long as our answer to affordability is to not increase the supply of market housing, not increase the size of the valley in a significant manner and instead we’re going to do it by putting in policies of rent controls, occupancy controls, resale controls, you’re never going to have a true marketplace. You have a marketplace that’s being manipulated by policy. It’s not a free market. A free market would say if there’s a demand out there let me go buy a chunk of land… and let the market decide.

The solution is let’s revisit the philosophy behind the size of the valley. We drew this line, 52,500 bed units, in the sand and said that’s it. And then of course we kind of admitted that we went over that with employee housing. So why can’t we have a full analysis of whether we should continue to control the supply side of the equation at the current level that it’s at? Should it be reviewed and we say maybe we should go to 60,000 to get what we need?

Pique: Are we going to see a change in the market with the recent property assessments having gone up in some cases about 60 per cent?

Kelly: My speculation would be there’s certainly a lot of people waiting to see what happens with their taxes. The assessment really doesn’t matter much. It’s what happens with your taxes because of the assessment. Hopefully the municipality won’t use this opportunity to raise some of the necessary financial money they need. I think if values start to top a little bit, which I think is going to happen, then my guess would be that the property taxes will come under a higher level of scrutiny. If house prices go up by $100,000 you don’t care if your taxes have gone up by $1,000, but if they don’t go up and your cost of living goes up, then it becomes an issue. And it’s going to become another example of the cost of living here and the cost of owning here getting out of touch with the realities of earning a living here.