Zeballos

Underwriting in Zeballos: Navigating Vancouver Island’s Deep Coast

For brokers writing files on Vancouver Island, Zeballos represents the absolute limit of remote lending. Located at the end of a long gravel logging road off the highway north of Campbell River, this ocean inlet community is not a commuter hub. It is a highly isolated settlement of 126 residents. While the population has actually grown by 17.8% since 2016, the market here remains exceptionally tight and illiquid. If you have a client looking to purchase in this area, you need to understand how we evaluate the real estate risk.

The housing stock in Zeballos is extremely limited. There are only 109 total private dwellings in the entire 1.55-square-kilometer municipality. Single-detached houses make up 85.7% of the market, with the remainder split evenly between duplexes (7.1%) and movable dwellings (7.1%). There are zero apartments or row houses. Because of this tiny inventory, transactions are rare. When a property does hit the MLS, finding a buyer can take months, if not years. This long liquidation timeline is the primary driver behind our conservative lending parameters.

From an economic perspective, Zeballos operates on a micro scale. The median age is 50 years, with seniors making up 23% of the population and working-age residents comprising 65%. Interestingly, the employment rate sits at 50.0% with a 0.0% reported unemployment rate. While historically rooted in forestry and commercial fishing, today’s largest employment sector is actually health care and social assistance, accounting for 22.2% of local jobs. Commute times are non-existent; 100.0% of working residents have a commute under 15 minutes, averaging just 7.5 minutes.

At Tekamar, we use private investor capital, which means capital preservation is our primary focus. If we have to foreclose on a property in an isolated inlet with no highway access, we must be prepared to carry that asset for a long period. To mitigate this carrying risk, we cap our maximum loan-to-value in Zeballos at 35.0%.

We score this community’s desirability at 7/10 and its economic strength at 6/10. We are absolutely willing to write mortgages in remote resource and coastal towns like Zeballos—in fact, our alternative guidelines are designed to look past the restrictions of institutional lenders. However, the borrower must have significant equity. If your client has the required down payment and understands the realities of rural coastal property ownership, we want to see the deal. Just manage expectations regarding leverage from day one. Zeballos offers unmatched access to Nootka Sound, but from a credit perspective, we must keep our exposure highly conservative.