by Jim Adair
Tuesday, July 03, 2012
"Canadians love a good deal, and there’s no question that there are still some to be had in recreational property markets across the country," says Elton Ash, executive vice-president of Re/Max of Western Canada.
Canadians also love their cottages, cabins and chalets, and while the recreational market has never slowed down dramatically during the last 10 years, it did take a bit of a breather as prices kept climbing. Lower prices, rising inventory and rock-bottom mortgage interest rates are giving the market a boost recently, says Ash, and "activity has also been fuelled by pent-up demand that’s been building since 2008, when many began waiting it out on the sidelines."
A recent Re/Max report says this year’s sales levels are up in 70 per cent of 33 markets examined. Prices are down in 49 per cent of markets and unchanged in 33 per cent of markets, while 19 per cent of the regions saw a price increase compared to last year.
Several generations of Canadian families have enjoyed having a home away from home for summer and/or winter fun, and for many the tradition will continue as it has for years. But several new trends may have an impact on the market going forward.
The Re/Max report says that sales to 60-plus baby boomers are down compared to past years, largely because of "enticing prices in the southern U.S." This is particularly true in Western Canada, where many purchasers have been lured to buy properties in Arizona. Re/Max says younger buyers and first-time buyers have stepped in to fill the void in most Canadian recreational markets.
The report says more young buyers are willing to compromise their property search to buy "back-row properties off the water". There’s lots of renovation taking place, but Re/Max says that with older and more rustic properties and/or vacant lots becoming increasingly scarce, there are fewer custom builds and tear-downs.
A survey commissioned by Royal LePage says there’s a significant difference between current cottage owners and would-be buyers when it comes to renting out their properties to help finance carrying costs. Just over half of intended buyers say they would consider renting as a way to help finance their purchase, but among current owners, 83 per cent said they do not like the idea.
"While renting out your property is an attractive option to improve affordability, the ability to do so profitably varies by region," says Phil Soper, president and CEO of Royal LePage. "Some areas have bylaws that restrict rental activity while others have strict noise regulations that might limit your ability to attract renters. It’s important that you talk to a local agent to get as much information as possible about the community you are targeting, should you want – or require – rental income to make recreational property ownership possible."
The Royal LePage survey found that 32 per cent of would-be buyers said they were willing to reduce their discretionary spending to make the purchase happen, while 25 per cent said they would try to buy a "fixer-upper". Twenty-two per cent said they would be willing to pool their resources with friends or family to buy the property.
What buyers want and current owners enjoy are also a little different. The most desired feature for both groups is "quiet", with current owners craving less noise than potential buyers. Four-season use of the cottage is more important to potential buyers than those who are already owners.
New forms of cottage ownership have also made their mark. Builder Geranium Corporation is constructing a 600-acre resort development called Friday Harbour, on Ontario’s Lake Simcoe, which will include a marina, a nature preserve and trail system, shopping and dining, an 18-hole golf course and "multiple market real estate offerings," says the company. It recently commissioned a survey to highlight the development’s close proximity to the Greater Toronto Area.
"Going to the cottage is a culturally engrained Ontario pastime, but the time we spend in traffic getting there is clearly one of the least enjoyable parts of the experience," says Earl Rumm, chairman of Geranium Corporation. The survey found that more than half of Ontario’s cottage owners take more than two hours to get to their property, and plan their arrival and departure times to avoid traffic.
The survey found that 62 per cent of owners go to their property multiple times in a month, and 55 per cent said they would go more often if the commute was shorter.
Cottage Advisors of Canada recently opened a community of stand-alone cottage condos in Prince Edward County. It says that because there are no maintenance chores for owners, the mood in the development "is always carefree and it feels like a holiday weekend."
The stand-alone cottages are seasonal, which keeps prices affordable and cottage ownership attainable for more people, the company says. Typically open from April through October, and then closed for the winter months, the cottages are closed by the management company and secured in a gated community.
People typically only use their vacation homes for less than a third of the year, but often spend money to keep it open year-round, the company says. The seasonal aspect also creates a better neighbourhood atmosphere. Because residents don’t "live" in the resort as their primary residence, everyone in the village is always on vacation, it says.
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