Greenwood

Greenwood Underwriting Guidelines

Greenwood is technically Canada’s smallest city, though that is really just a historical oddity left over from a late 1800s mining boom. In reality, it is a quiet highway town in the Boundary Country, sitting right where the Okanagan transitions into the Kootenays. If you are looking at a deal here, you need to set aside typical urban economic metrics. This is a slow-moving heritage market, not a growth hub, and your underwriting strategy has to reflect that.

The local demographics tell you exactly who your borrower is. With a median age of 61 and seniors making up 41% of the population, you are almost always dealing with retirees on fixed incomes, semi-retired tradespeople, or buyers who were priced out of the Okanagan and bought here because of the lower entry point. The local economy is exceptionally small. The median household income sits right around $47,000, and the unemployment rate is high at 18.9%. Local employment is concentrated in construction, manufacturing, and healthcare, but because the town itself offers limited jobs, many residents commute to Grand Forks or Osoyoos. From an underwriting standpoint, you are rarely going to see strong, locally-sourced T4 income. These files are almost exclusively equity-driven plays where we look closely at pensions, alternative income, or co-signers.

The real estate market is equally constrained. Greenwood covers just 2.42 square kilometers, and the inventory is highly specific. Over 73% of the housing stock consists of older single-detached homes, while mobile and movable dwellings make up another 18.7%. There is virtually no new development. Because the population has remained flat at just 702 residents, liquidity is our primary concern. If a borrower defaults, the property has to be sold into an incredibly shallow local buyer pool, or we have to wait for an out-of-town buyer looking for a cheap recreational property.

This limited marketability is why we keep a tight rein on leverage in the Boundary region. At Tekamar, we have to look at every deal through the lens of a potential foreclosure. If we have to take back a property in a town of 700 people, the carrying costs and marketing time will be significantly higher than they would be in Kelowna or Victoria. Because of the older housing stock and the slow exposure times, our maximum loan-to-value for Greenwood is capped at 55.0%.

That said, we still write clean business here when the equity makes sense. If you have a local retiree looking to pull equity via a second mortgage to consolidate debt, or an equity-rich buyer who needs a quick first mortgage to secure a heritage home while they wait for their lower mainland property to close, we want to see it. As long as there is enough of a cushion to mitigate the slow liquidity, Greenwood fits right into our alternative lending program.