It’s been a long road. But there’s optimism regarding the real estate market in Sun Peaks.
“Looking at the different types of properties in Sun Peaks we can identify without a doubt that the market is turning,” she said.
According to research by her company, the most dramatic turnaround had occurred in large, end-unit townhomes, which showed a 26 per cent increase in sale price since the bottom of the market in the spring of 2013.
While some other property types haven’t yet turned around, such as single family homes or smaller condos, generally the market has improved and the numbers back it up. From January to September there was over a 50 per cent increase in overall sales over last year.
But at the Sept. 7 municipal meeting, Sun Peaks’ council was officially made aware of a problem many were already familiar with — financial institutions are increasingly denying lending for Sun Peaks properties.
Tod Kelleran, chairperson of the Non-Resident Advisory Committee, submitted a letter to council outlining several recent experiences of those trying to secure financing in Sun Peaks.
“When we were purchasing at Forest Trails, we spoke directly to Kamloops HSBC who indicated their bank did not wish for any more exposure on property loans associated with Sun Peaks, no matter how much equity we were prepared to put into the property,” stated the letter. “We also tried a mortgage broker, and their response back from other banks was the same and that the only possibility was a non-banking institutional lender but that was
Forster said Sotheby’s began noticing the problem around the beginning of this year.
“In general, mortgage rules have tightened up. The lenders want more of down payment and other regulations have changed,” said Forster. “I think now they are going through other areas with a fine tooth comb to find out where the lenders were vulnerable during the downturn years in order to make sure that doesn’t happen again.”
And one of those areas is recreational properties.
Sun Peaks’ properties zoned as Tourist Accommodation and those with a rental covenant on the title are the most likely to be declined.
Despite that around 50 percent of properties in Sun Peaks have a rental covenant, it is not usually enforced. While properties residentially zoned are generally more likely to be approved there have also been instances where these properties were also denied.
In an email from Dominion Lending included in the letter, it was stated that even if the property was zoned as residential, some lenders were denying loans if they found the property listed online as available for short-term rental.
“…If loans are not being made on properties with or without the rental zoning, we feel this will make future sales difficult and values indeed will plummet. As a result this could certainly hinder the growth and viability of the resort as a whole,” stated Keller in the letter.
Implications of this new, unofficial policy have been predicted to limit future interest in investing and also make it more difficult for the community to grow.
When a sale is not completed due to these problems both the municipality and Sun Peaks Resort LLP (SPR) are notified.
“We hope to invite some of the lenders here to look at the resort, particularity some of the decision makers, and help them to understand that Sun Peaks is a different situation than many of the ‘recreational’ properties in the province.” said Darcy Alexander, general manager for SPR. “We are, in fact, a municipality, with a strong, new infrastructure. We aren’t an unorganized territory, or remote, or without fire protection and a bunch of those issues.”
Alexander also said he understood the lending rational had been very inconsistent, leading him to believe there is a lack of understanding.
“We intend to work with the municipality and the other businesses in town to improve communication with lending institutions and go from there,” he said.
Alexander said he had been hearing similar stories from within the Interior.
“We are not alone. Sun Peaks is not being singled out for special treatment. Just the contrary — we are being tarred with a very broad brush.”
Mayor Al Raine stated the municipality was aware of the problem and planned to work with key players to solve it.
Despite the issues surrounding the lending companies, Forster remains optimistic.
“The fact that our sales have increased this year over last in spite of all this tells us something. That we are up 50 per cent basically says people are still buying in spite of the difficulties. People that want to buy here will continue to pursue lenders until they finally find one. It hasn’t been easy for some of them.”