There is one ski town that bans non residents from buying real estate? What ski town has implemented this change? (Do you know based on the pic above?) Why was the ban put in place? What has happened to real estate values in this town and surrounding towns? Should other ski towns follow this trend?
What ski town banned non residents from owning real estate?
In my travels looking at real estate I came across one ski town that implemented a complete ban on non residents from buying real estate. The town is Banff. In order to live in Banff, you need to work in Banff. It’s a Parks Canada regulation to make sure housing is available to the people who work in the community, so it isn’t used as vacation properties or second homes. Here are the details:
According to the National Parks Lease and License of Occupation Regulations an eligible resident is defined as:
(a) an individual whose primary employment is in the park,
(b) an individual who operates a business in the park and whose presence at the place of business is necessary for the day-to-day operation of the business,
(c) a retired individual who resides in the park and who, for five consecutive years immediately prior to retirement,
(i) was employed primarily in that park, or
(ii) operated a business in that park and whose presence at the place of business was necessary for the day-to-day operation of the business,
(d) a retired individual who resided in the park at the time of the individual’s retirement and who resided in that park on July 30, 1981,
(e) an individual who is a student in full-time attendance at an educational institution that is located within the park and registered under the Income Tax Act or applicable provincial legislation relating to education,
(f) an individual who is a lessee of public lands in the park and who
(i) was the lessee of those public lands prior to May 19, 1911, or
(ii) is a descendant, by blood or adoption, of an individual who was the lessee of those public lands prior to May 19, 1911, or
(g) the spouse or common-law partner or a dependent of an individual referred to in any of paragraphs (a) to (f).
What happens to real estate prices in Banff
I thought Banff is an interesting test case, in essence the entire town has deed restrictions with residency requirements. As suspected this greatly reduces the values of properties in Banff as the pool of buyers is so limited and the income of the prospective buyers is also limited, this is similar to what we see throughout Colorado with deed restrictions where they trade substantially below market prices. On average the prices are around 75% less than market rate properties.
What happens to real estate in surrounding towns?
This is where the theory of banning second homeowners gets interesting. As suspected people still want to be in the area, as you go about 20 minutes from Banff there is a historically “affordable” area called Canmore. Ironically prices in Canmore have now shot up to 4 to 5 times the prices in Banff as they don’t have the same deed restrictions. In essence the ban on second homeownership has just shifted the issue to more affordable areas that are now owned by second homeowners and used by them or turned into nightly rentals. In essence the affordable housing crisis has moved to other towns which has proliferated the affordable housing issue to the entire region.
Why should Colorado ski towns care about Banff Canada?
What has occurred in Banff can provide a test case for what happens in Colorado based on policy decisions by various ski towns. For example do increased deed restrictions help a few while hurting more. For example if a ski town implemented a large scale plan with deed restrictions for affordable housing, think Steamboat Springs Brown ranch, will this have huge unintended consequences for every surrounding community and lead to higher prices for non deed restricted housing as a result of this proposal and others. To highlight this issue there are now bumper stickers and t-shirts that tons of locals have that use the steamboat logo and have replaced it with the tagline “shitshow” to emphasize the huge problems as a result of the decisions that have radically altered the market and led to huge unintended consequences.
Similarities to Breckenridge Colorado
Watching Banff is not just theoretical, we saw a similar situation play out in Breckenridge and Summit County. As Breckenridge tightened nightly rental laws to restrict the number of nightly rentals, suddenly the rest of Summit County (Frisco, Silverthorne, Dillon, Copper Mountain, Keystone, etc…) once affordable parts of the county became overrun with nightly rentals. In essence, the issues in Breckenridge were now being distributed throughout the county and making affordable areas less affordable. This is quite the opposite of the intent of Brekenridge’s nightly rental laws.
Key Learnings from Banff and Breckenridge
Every ski town in Colorado and throughout the US should look at the unintended consequences of regulations both in Banff and in Breckenridge and internalize that decisions can not and should not be made at the city level. These decisions need to be much larger to the county and regional level. For example what if Breckenridge would have coordinated with Summit county on nightly rental regulations so that they were uniform throughout the county and even region by including cities like Leadville that are also immensely impacted.
Until our elected officials realize that decisions should not be made unilaterally as the impacts are far and wide. Just as we saw outside of Banff with huge impacts to surrounding communities. It is great they preserved the town of Banff, but at the expense of Canmore, Lake Louis, etc…. The same is true about decisions made in Breckenridge, Steamboat, etc…
If you are reading this, please forward to your local officials and require that large decisions on housing are made with a much broader view on how entire regions are impacted. For example Steamboat should be required to consult with Routt county and the cities of Hayden and Oak Creek on big regulations so that as a region planning can be done as everyone will be impacted by the decisions made.
