Before we get into this week’s round of name calling and mud slinging – on second thought, let’s avoid both of those fun-filled activities this week – I think our good neighbours at 19 Mile Creek, at least the ones who bought their homes when they were new back in 2000, ought to acknowledge their debt to the Whistler Housing Authority. Not the debt of having a place to live; heck, the hard-workin’ boys and girls at WHA were just doing their job. The debt I’m talking about is more tangible.
If you’re one of the lucky ones who bought a three-bedroom home at 19 Mile, your debt to the WHA is $99,124. That’s right, a cool hundred grand. If you bought a smaller place, your debt is less. If you bought from the original purchaser, even less.
So if you’re one of the 19 Milers who want to get lawyers involved or who think you can’t trust those rascals at the WHA because they’re obviously out to screw you, right about now you might be askin’ yourself why you’re beholden to the WHA for an uncomfortable amount of the paper profits you figure you’ve made on your home.
Ironically, your indebtedness stems from the same kind of meddling you’re complaining about right now.
In 1998 your neighbours-to-be were up in arms about the prospect of you moving in to their neighbourhood. They organized, passed around petitions, and packed a public meeting at the Chateau where they proceeded to say scandalous things about your good character, calling you drug dealers, pornographers, paedophiles and – brace yourself – transient low life. They were certain you’d ruin their neighbourhood, Alpine, drive down their property values and quite possibly turn their kids into junkies. They said very unkind things about and to council of the day, not unlike some of the things that have been getting said lately.
But council persevered, hewing to the first principle that informs all of the decisions WHA makes. That principle, in case you’ve forgotten, is that housing employees in town is a good thing. One of the other first principles is that the housing produced should be affordable for second and subsequent buyers, not just the original purchaser. I think they kept referring to it as "a nest, not a nest egg."
Having said that, the folks at WHA – who, let us not forget, were breaking new ground with this affordable, sustainable housing gambit – weren’t very happy with the way the resale cap formula was working. The formula itself, the one the Barnfielders seem to have so much trouble understanding, limited the appreciation to 3.4 per cent in the first year. Subsequent years’ appreciation was to be calculated at 40 per cent of Royal Bank prime rate less 2 per cent. Since the placement of brackets is everything in math, I think the formula looked something like this: .4 x (RBC Prime — 0.02).
It wasn’t a bad formula. It tried to take into account the effect of inflation inherent in prime while, at the same time, it tried to limit the increase should prime balloon back up to the ridiculous levels it reached in the early 1980s, 23 per cent.
But no one expected Jean Chrétien and Pauly Martin to wrestle inflation to the ground so successfully. Applying the formula meant properties affected by it were increasing almost not at all.
So, learning from their past efforts, those unscrupulous WHA people took another stab at it. This time they came up with a formula based on GVRD house prices, the notion being they’d like someone in Whistler affordable housing to be able to sell out and move into a townhome in Burnaby, though why anyone would want to do that is beyond me.
But they screwed the pooch again. Just as no one ever expected prime to languish in the low single digits, no one expected the bulimic Vancouver housing market to take off like a rocket.
So why is this important? When council sat through that agonizing, intolerant, ugly public hearing in 1998, the 19 Mile Creek project was on the drawing boards and the old formula was in place. By July of 2000, the time 19 Mile was built and people were moving in, the new formula was in place and the decision had been made to apply it to 19 Mile.
If you bought a three-bedroom home at 19 Mile in July of 2000, it cost you $198,707. It is now worth a maximum of $317,042. In round numbers, that’s a 60 per cent increase in value. If the WHA hadn’t meddled, hadn’t tried to do their job a little better, hadn’t tried and, in hindsight, failed, the value today of that same home would be $217,918. That’s because the average prime rate during the same period was a paltry 4.96 per cent.
I’ll wait while you go call WHA and thank them.
The long and short of it is this: no one’s trying to screw you out of your fortune. Falling back on first principles, WHA is trying to reign in the unexpectedly rapid increase in the maximum value of the GVRD formula units so the next kids on the wait list can afford them.
If you’re worried about your unit being at a disadvantage when you decide to sell in the future, because the one next to it had sold in the past and come under the proposed core CPI formula, I’d humbly suggest you be more concerned about how unattractive it is compared to my three-bedroom unit being built at Nita Lake, for which I’ll pay $272,000 and which will appreciate far slower than yours. Or the units that will likely be built at Rainbow… or the athlete’s village… or the Shoestring… or whatever comes later.
The fact is, if you were playing this game with some smarts, you’d voluntarily opt in to the CCPI formula without selling your place. Bear with me; that’s not an insane suggestion. If you do that, your home will appreciate at the same rate as the homes that sell and are subjected to the new rate. When time comes for you to sell, you won’t be at any disadvantage vis-à-vis other units around you, in fact you might have one up on your more greedy neighbours who chose to chase paper profits. You’ll crystallize your current gains as opposed to running the risk of watching some of them evaporate when the bubble bursts in Vancouver, which it’s likely to at any moment. Let us not lose sight of the historical swings in that market, a market where previous homeowners have watched a large whack of their paper net worth evaporate in past downturns.
And you’ll be doing the right thing.
You don’t have to do the right thing. You can go ahead and take the WHA and muni to court. You can live your lives like you’re the centre of the universe. You can not give a damn about the people who come after you. You can scuttle the success of this town’s efforts to deal with the affordability conundrum.
But I think council is smart enough to know the 200 votes you’ve threatened them with are nothing compared to the 500+ on the waitlist who will think they’re heroes if they stick to their guns on this issue.
