Whistler Real Estate Market Stabilizing

[metalhead]

I'm definitely not in that MLM scheme.


Yes, thanks kevind for the Whistler perspective. Very interesting.
Property may seem a bargain there now but how many people can actually afford a 1.5 million dollar+ 2nd home?
There are a limited amount of people that can afford such a thing and they don't seem to be buying right now.

[robert james]

It appears that Whistler may have been the classic "Pump and Dump".

[Greenhorn]

Whistler in general is an oddball and unpredictable market. It's a one industry town so it's either "boom" or "bust" and no in between. Housing prices tanked between 2002 and 2004 completely bucking the rest of the Canadian real estate boom. It's been buyers market for the years. While the rest of Canada was going up in price, Whistler was steadily moving down year over year for the luxury market...specifically the 2-3.5 mil range. The only things moving for SFD are 1.5 million and under.

I have several friends and associates that got hammered and are still stuck in Whistler and can't get their properties sold. One guy has had his place for sale for 5 years and has had only one offer in all that time for 1 million under his build cost and he just keeps dropping the price. He's also lost most of his hair from the stress. I know of another place that went on the market new in 2005 for just under 3 million and last time I looked it had dropped to the 1.8 range and still for sale. The build and land cost him more than 1.8. A round of drinks one evening last season at the longhorn and I hear this guy over at the next table make the comment something like "Christ, i feel like I could put my place up for 1 buck and no one would call". Another friend I know just wishes his place would magically burn to the ground because the insurance replacement build value is 1.5 million more than he can hope to get for it today if he's lucky and he would still own the land. I could go on and on.

Right now is one helluva time to pick up some seriously below replacement cost luxury properties. When you can buy a house in a world class resort for less than it costs to build AND get the land for free...it's a good time to buy.

Whistler bankrupted a very good friend of mine. He got in 4 years ago on the Olympics hype but it was all a mirage. Once his property was underwater, he gave it back to the bank and got sued for the deficit. Just going through bankruptcy now. Luckily other assets like his home were in his wifes name and she has credit still or he would be on the street. They both have jobs and income right now, but the deficit to the bank was too huge to recover from. Bankruptcy was the only choice. I went to many parties in his house in Whistler. It was beautiful. Towards the end, he had a tenant who operated the property as a type of hostel/hotel. The tenant was always late on rent payments though he was making money and getting paid every month. There are a lot of scammers up there.

[kevind]

Whistler in general is an oddball and unpredictable market. It's a one industry town so it's either "boom" or "bust" and no in between. Housing prices tanked between 2002 and 2004 completely bucking the rest of the Canadian real estate boom. It's been buyers market for the years. While the rest of Canada was going up in price, Whistler was steadily moving down year over year for the luxury market...specifically the 2-3.5 mil range. The only things moving for SFD are 1.5 million and under.

I have several friends and associates that got hammered and are still stuck in Whistler and can't get their properties sold. One guy has had his place for sale for 5 years and has had only one offer in all that time for 1 million under his build cost and he just keeps dropping the price. He's also lost most of his hair from the stress. I know of another place that went on the market new in 2005 for just under 3 million and last time I looked it had dropped to the 1.8 range and still for sale. The build and land cost him more than 1.8. A round of drinks one evening last season at the longhorn and I hear this guy over at the next table make the comment something like "Christ, i feel like I could put my place up for 1 buck and no one would call". Another friend I know just wishes his place would magically burn to the ground because the insurance replacement build value is 1.5 million more than he can hope to get for it today if he's lucky and he would still own the land. I could go on and on.

Right now is one helluva time to pick up some seriously below replacement cost luxury properties. When you can buy a house in a world class resort for less than it costs to build AND get the land for free...it's a good time to buy.

Whistler bankrupted a very good friend of mine. He got in 4 years ago on the Olympics hype but it was all a mirage. Once his property was underwater, he gave it back to the bank and got sued for the deficit. Just going through bankruptcy now. Luckily other assets like his home were in his wifes name and she has credit still or he would be on the street. They both have jobs and income right now, but the deficit to the bank was too huge to recover from. Bankruptcy was the only choice. I went to many parties in his house in Whistler. It was beautiful. Towards the end, he had a tenant who operated the property as a type of hostel/hotel. The tenant was always late on rent payments though he was making money and getting paid every month. There are a lot of scammers up there.

Ouch. Yep...a lot of good people lost a tonne of money by no real fault of their own. Even some of the smartest people around did not see the hit coming. Whistler is the one place in all of Canada over the last 5 to 7 years to have not purchased anything for investment purposes. Buying for a personal recreation property...totally different story. I used to have some stats about the real estate life cycle over the last 30 years, trying to find them, but Whistler seems to be one of those "10 yearish" markets that when Vancouver is booming it's dead and when Vancouver slows downs (after a run up) it does well as people take their capital gains and start buying luxury items like rec homes, boats, cars etc. However, this time round is different because as we all know Vancouver (along with the rest of the country) tanked which means people don't have the capital gains to freely spend which brings up another observation that it my take another 10 years for Whistler to come back...almost 20 in total? People in Vancouver right now are definately focusing on wound licking and I rather doubt a ski chalet is at the top of the priority list

How about we examine a chain of events and try to predict the future ( the dates I am going to use are somewhat "general)

1998-2000: US dollar soaring against the Loonie, Techboom silicon valley "option babies" and the boys from Microsoft decend on Whistler in hordes. Whistle in "flavour" as the coolest ski resort to play at for half the price. Longhorn is the new Vista OS secret name after the Longhorn pub

2001-2002: Jerkoff President to the south goes to war and starts deflating the US currency and the machine of war and propoganda and fear mongering begins.

2003-2004 - Softening but still popular full hit has yet to reveal itself. US dollar tanking against the Loonie, Investors and option babies who bought at 50cents on the dollar start to dump luxury property for the same price or less that they paid for and they still make profit due to currency. No motivation for these owners to try and make a higher priced sale. Whistler get's the Olympics...whoohoo. Olympic aversion to hit soon. Ghost town coming. Microsoft stock goes into the tank. Whistler not the "flavour of the month" any more.

2005-2006 Residential sales plummet in whistler. I am trying to track down the exact numbers again but if I recall it was something staggering like 60% or more. Anyone have that historical data handy? ( The 2002 to 2005 sales states of chalets that is) Americans becoming paranoid and stop travelling because they watch too much CNN propoganda. Highway construction starts to piss off travellers due to continuous delays, whistler tourism take a massive hit as the Washington state travellers dissapper, border delays...more paranoia...to much hassle to come to Whistler, just go to stevens pass or crystal or any one of their resort. US Dollar diving, Ongoing economic problems, US war machine in full gear. SARS slams the Asia Tourism. People get "olympic" aversion and automatically think real estate has been artifically jacked to milk it. This was true in some cases for sure but not across the board. Whistler retailers take a massive hit with the huge drop in tourism. Small businesses are dropping like flies. I remeber strolling the village and being amazed at the number of "for lease" signs.Big box and corporate tailers descending up Whistler more and more as they are the only ones in general able to absord the high priced commercial lease rates which begins to squeeze the "botique" store fronts out which has a negative effect on the public perseptions etc etc. Gone are the buyers who can afford the "mid priced" luxury items. Either there is not enough money (IE the 1.5 million and under market) OR they have so much of it (5 million plus market) that they can buy whatever their fancy. Whistler not the "flavour of the month" any more.

2007-2008 No good news coming out of the states. US traffic gone. Overseeas long haulers, well that's a good one to look at. Why would someone buy real estate that they have to fly 14 or 16 hours to when they have options closer to home...specifically the EU markets. Sure there are occasional "playboy jet setters" but they are rare. Vancouverites are definately skiing and playing in Whistler but not spending their money on big ticket items as they are still to busy focusing on capital gains and wealth building.

2008-2009 - Vancouver market crashes. Typical wealth building strategy has collapsed. This is a generalization of course because I also know people with more money than god that cashed out in the spring and are now just waiting, picking up firesales here and there but no rush.

The future

2010 - Future: Olympics. Average out of town olympic vistor annual income...let's pick a number of at least 250K (A to afford the tickets and B to be able to just up and drop what they are doing and fly to Vancouver/Whistler) Whistler is, without a doubt, intoxicating as is Vancouver. 15,000 daily visitors(?) vistors get a wiff of Whistler. How many will be foreign I have no clue. Let's say just 500 wealthy people fall in love with it and say "Wow...let's buy something here BUT let's go home and think about this some more and come back next season. Cross fingers 2010/11 ski season shapes up like this one does. There are many powerful attractions going for Vancouver. Anyone remember what Expo did for Vancouver? I sure do. Took us from being a pimple on the map with clear skies to a a smog choked city in a few short years. But, Whistler is in my opinion "over built" to sustain a Canadian based economy. It's really unfortunate but really...how many Canadians can sustain Whistler alone? YOu know what? This all started with that Jerkoff Bush...domino effect to his administrations policies.

Well...that's something to chew on. Now before anyone flames me here...There are generalizations of a complex puzzle and some of my dates may not be 100% accurate so to speak but this is how I remember it...in general.

[RENoob]

i like your analysis kevind

[kevind]

Hindsight as they say is 20/20. The problem is when you are in the middle of it and the future "crystal ball". So many things hit whistler that were beyond it's control one right after another that had zero effect on Vancouver pricing.

So...let's go back to that 500 wealthy person scenario. Let's say 200 of those 500 wanted to by and actual residence vs a condo. There are less than a hundred homes for sale so that would put pressure on prices. HOWEVER, if by 2010/11 ski season the mortgage rates have gone up (odds are they will) and now they can borrow less then that puts downward pressure on prices. Let's say that some other natural disaster happens that year....like it rains and there is no snow at all. It will be a ghost town. Let's take something else into account. What about the flood of product coming online after the Olympics that is NOT designated employee housing...this will also put pressure downward. Quick MLS search put 100ish homes for sale in all of whistler in all price ranges on the MLS. IN the dead zone there are 21 homes for sale (2-3.5 million)...or 20% approx.

Let's look at some more "facts". The cheapest MLS house for sale in whistler is asking $750. Let's say they get it. That sets the land value in the shittiest, cheapest part of Whistler...you are buying the dregs of the barrell. Now let's look at building cost model. You have to build something that will sell for under 1.5 million OR you are building it for yourself but don't want to have a guaranteed immediate loss just in case things go sideways. Whatever the case, you need to stay within the only saleable range...under 1.5 The soft costs are going to run up to 300K to be safe including minimal profit or equity buffer. Minus land value and you are left with 450K building budget. What that says to me is tiny little cabins like those 1970s barrels are the only option for new construction. 450K at 300 per square foot (good stuff in whistler is 400+) means you can build a maximum of 1500sqft to be safe. Wow.....I have not seen a new home at 1500sqft in whistler ever except for condos and townhouses. So that tells us that there will be NO NEW CONSTRUCTION of SFD until either the land crashes to 350K and OR the price point goes up to 2 million OR building costs get cut in half OR people are more than happy with 1000 to 1500 sqft. The anomolly is of couse the expception...the gazillion dollar homes to the jet set playboys....of where this is a lot to choose from. I see "granite falls" is up for sale after 5 years of construction and Akasha...at 14million? Please...the guy bought it for 6 or 8 wasn't it originally? Now in this price range of extremes...why would you not just build your own custom dream palace instead of buying one designed for someone else? I would.

Kind of makes the head spin doesn't it?

[Austin]

I think global warming / climate change plays a pretty big role in all of this as well.

[metalhead]

Didn't you read any of those recently hacked and stolen emails?
I wouldn't be too worried about AGW.