BANFF, ALTA – A single family home in Middle Springs within the portfolio of the Banff Housing Corporation is for sale for $1.2 million – the first time the price to the buyer has gone over the $1 million mark in the affordable housing program’s history.
The market value of the four-bedroom home at 25 Fairholme Place, which was built under the historical equity share model in 1999, is estimated at almost $1.6 million, however, with the homeowner equity at 75.84 per cent, the price to the buyer sits just below $1.2 million.
Mayor Corrie DiManno said she has empathy for those who are trying to get into the housing market.
“When they look at a price like this within our Banff Housing Corporation portfolio, it would be tough to get in at this type of price,” she said.
“With the data we have about the income that Banffites earn we know that this is likely unsustainable for most folks,” she added, referring to data showing 82 per cent of Banff’s population makes less than $50,000 and that the average median family double income in Banff is $96,000.
However, Mayor DiManno said the reality is this single family home, which has a legal suite included, was built under the historical equity share model before the BHC moved to the price restricted model about 14 years ago.
“The price has gone up and I can confirm that there has been interest already in this house,” she said. “I think the rental suite helps people make it work.”
Created in 1993, the BHC is an arm’s length, non-profit corporation owned solely by the Town of Banff, whose shareholder is Banff town council.
The BHC has two different ownership models for maintaining so-called value pricing through multiple owners – equity share and price-restricted.
Under the equity share model, the BHC owns a percentage of the home – anywhere from 13.2 per cent to 35.32 per cent – and the homeowner pays for and owns the rest.
When the home is sold, the BHC can choose to continue in this arrangement with the new buyer, so that the new buyer pays for less than 100 per cent of the market value of the home.
Over time, if house prices increase, the dollar value of the BHC’s share and the dollar value of the homeowner’s share both increase at the same rate.
Alison Gerrits, director of community services for the Town of Banff and former member of the BHC board of directors, said different levels of affordability are available within the equity share portfolio, with equity share percentages ranging between 13 and 35 per cent.
“The intent of that model is that it reduces the overall price to the buyer,” she said.
“The equity share percentages for all the units that were assigned when they were originally built don’t change and they go with the property.”
In 2008, the BHC board of directors adopted a position that development of Middle Springs 2G and all future developments or property acquisitions would use a price-restricted model. The price restricted model, however, was not applied to existing equity share homes.
Under the newer price restricted model, the BHC owns a percentage of the home and the homeowner pays for and owns the rest, however, the future resale price of these properties is tied to a price restriction of two percent per annum, compounded annually.
The price restriction is tied to the amount the purchaser paid for the unit when the property was originally sold.
“The reason the BHC moved away from the equity share model for new builds or newly acquired developments was admittedly an attempt to try to control the rapid escalation of housing prices that were seen in the private market,” said Gerrits.
“But the reality is that equity share portfolio still exists. Although the BHC has been using that price restricted model for well over a decade, the portfolio still has equity share units that do offer a wide variety of price points.”
For example, there have been nine sales in the BHC’s equity share portfolio of townhouses, duplexes and single family homes over the past three years, with prices to the buyer ranging from $498,000 to $701,000.
The Fairholme Place house currently for sale is a four-bedroom, three-bathroom home built in 1999. It has 1,764-square-feet with a 953-square-feet basement.
Above the garage and separate from the main floor is a self-contained legal suite. Taxes are approximately $5,511 a year.
It is believed this is the first time the price to the buyer has gone beyond $1 million.
“It’s my understanding this is the first time this has ever happened, but going back to the nine sales in the last three years, the price to buyer, the highest that’s been reached was that $701,000, so this particular listing is a bit of an anomaly,” she said.
“Seeing that list price, it’s totally fair that people would have questions; however, the simple answer is the equity share was designed when the BHC was put together years ago. When we look at the range, people have been able to get into the housing for under $500,000 in the last three years – it is serving a need.”
As part of a 2009 mandate review of the BHC, the board of directors at the time recommended restricting the future resale of existing properties to a price restriction of a maximum of two per cent per year, compounded annually.
This immediately sparked outrage from homeowners who feared such a move would heavily affect their ability to sell their homes and was not part of the original agreement.
In 2011, following much controversy, debate and legal opinions, the council of the day made a commitment to never set price caps on existing homes under the equity-share model.
A restrictive covenant was registered against the BHC’s head lease titles for all remaining properties built under the equity share model. The covenant describes the intention of not putting price restrictions on existing BHC housing. The legal document can’t be lifted by future councils without a public hearing.
